Nonlife insurers’ loss rate hits record

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Nonlife insurers’ loss rate hits record

The loss rate for local nonlife insurers’ auto insurance businesses soared to a record high last month due to increased payments stemming from a cold snap and heavy snow, industry data showed yesterday.

The country’s top three nonlife insurers - Samsung Fire & Marine Insurance, Dongbu Insurance, and Hyundai Marine & Fire Insurance - posted an average loss rate of 103 percent in December, the data showed.

The loss rate refers to the proportion of coverage a nonlife insurer pays to its policy holders from insurance premiums. The higher the loss rate is, the more likely the insurer will go into the red.

Samsung Fire, the country’s top nonlife insurer, saw its rate reach 107 percent last month, jumping 26 percentage points from the previous month, according to the data.

The increase came as the amount of payouts to policy holders surged last month due to the cold weather, while car insurance premiums were slashed by 2.5 percent in April following government moves to battle inflation.

Korean nonlife insurers are expected to lose money for fiscal 2012, which ends on March 31, on soaring loss rates. A rate of 77 percent is seen as their break-even point.

The gloomy earnings outlook was also caused by plunging returns from capital investments amid a slump in the local stock and housing markets, market watchers say.

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