Extreme cold weather conditions in South Korea resulted in a surge in the loss ratio for motor insurance.
The motor insurance loss ratio of the top-5 insurers in the country - Samsung Fire & Marine, DB, Hyundai Marine & Fire, KB, and Meritz Fire & Marine, was 88.7% in February, a sharp increase of 9.7 percentage points from the same month in 2024 at 79.0%. This is a 6.9 percentage point increase compared to 81.8% in January and far exceeds the break-even loss ratio for motor insurance, which is approximately 80%.
The sharp rise in accidents caused by the cold wave and heavy snowfall, resulted in a fall in the operating profit of motor insurance business for insurers in the market. Motor insurance premiums have witnessed a fall over the past four years and this trend is expected to continue into 2025. Industry experts believe that the loss ratio will worsen further in 2025, with more people driving during the spring period, and a 2.7% increase in hourly maintenance labour costs. On the other hand, a number of insurers in the market have reduced motor insurance premium by up to 1%.