Auto insurance has turned to a loss for the first time in 4 years, but major property and casualty insurers like Hyundai Marine & Fire Insurance and DB Insurance have begun hiring for auto insurance this year. This is interpreted as an effort to prevent customer churn as competition in auto insurance heats up. Auto insurance is a product that requires 'economies of scale,' where a large number of subscribers stabilize the loss rate.
According to the insurance industry on the 9th, Hyundai Marine & Fire Insurance recruited employees to guide customers regarding telephone settlements and insurance payment calculations for minor auto accident claims until the 28th of last month. At that time, Hyundai Marine & Fire Insurance actively indicated 'the highest level in the property and casualty insurance industry' in salary items while hiring personnel. DB Insurance is conducting recruitment for experienced online marketers for auto insurance until the 13th. The hired employees will be responsible for developing suitable auto insurance products and services by sales channel.
Small and medium-sized insurers are also speeding up workforce expansion. Carrot General Insurance will hire employees to handle insurance discount surcharge rate reviews and underwriting reviews in the auto insurance customer experience team by June this year. Discount surcharges are tasks based on the driver's accident history to either discount or increase insurance premiums, while underwriting reviews involve assessing and approving changes to existing insurance contracts. Hana Insurance hired employees to handle auto insurance work until the 6th. The hired employees will be responsible for auto insurance closures, reinsurance work, underwriting reviews, and contract management.
Despite recording losses in auto insurance last year, property and casualty insurers have taken to hiring staff for marketing and other purposes to secure subscribers. The characteristic of auto insurance is that the more subscribers there are, the more stable the loss rate becomes. Even large property and casualty insurers, which account for over 85% market share (Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, KB Insurance, DB Insurance), find it advantageous to maintain subscriber numbers if the loss amount is not astronomical. For small and medium-sized companies with relatively low revenue, attracting customers is essential, even to mitigate losses.
Auto insurance is a product that is difficult to generate revenue. This is because it is hard to raise premiums even if the loss rate increases. In the case of auto insurance, drivers are required to have coverage, and the number of subscribers is known to reach 20 million. The high number of subscribers directly correlates with the consumer price index trends released annually by the National Statistical Office. Raising premiums risks becoming a burden on the common people, leading to criticism, so financial authorities regularly pressure property and casualty insurers to lower auto insurance premiums. Ultimately, insurers have no choice but to increase subscribers to strengthen their premium income base.
However, auto insurance is an attractive product for insurers, as it generates stable cash flow. According to the Financial Supervisory Service, last year, the gross premium income from auto insurance (premiums received from customers) was 20.6641 trillion won. With stable cash flow, there is the advantage of being able to earn investment returns through asset management, such as bonds.
Last year, while the insurance profit and loss from auto insurance recorded a loss of 9.7 billion won, the investment division for auto insurance generated 598.8 billion won in revenue. The total profit and loss for the year reached 589.1 billion won, an increase of 6.3% from the total profit and loss of the previous year (55.39 billion won), which had recorded a profit. The total profit and loss from auto insurance has steadily shown a surplus since 2021, with 398.1 billion won and 478 billion won in previous years. The industry analyzes that the increase in investment profit and loss was due to the rising value of bonds purchased by insurers following the interest rate cut last year.
An insurance industry official noted, "With companies unable to raise auto insurance premiums due to pressure from financial authorities, they are conducting related personnel hiring to focus on expanding subscribers."