Insurers in South Korea Experience First Losses in Auto Insurance in Six Years

Seoul: Insurance firms in South Korea suffered their first loss from their auto insurance business in six years in the first half of the year due to increased costs, data showed Tuesday. The total profit of 12 insurance companies that offer car insurance came to 238 billion won (US$177 million) in the January-June period, down 37.7 percent from a net profit of 382 billion won over the same period last year. According to Yonhap News Agency, the profit includes gains from their investment. More specifically, their auto insurance business racked up a net loss of 185 billion won in the first half, marking the first loss in six years, the data showed. Their investment return rose 20.2 percent on-year to 423 billion won over the cited period. Their average loss rate stood at 84.9 percent in the first half, up 1.6 percentage points from a year earlier, according to the FSS data. The loss rate refers to the proportion of coverage a non-life insurer pays to its policyholders from insurance premiums. The higher the l oss rate is, the more likely it is for the insurer to go into the red. Their losses from auto insurance were largely attributed to a rise in insurance-related costs, while the number of accidents fell 4.5 percent on-year to 1.74 million over the cited period.