Weather, insurers’ loss rate improve

Korean nonlife insurers’ loss rate for their auto insurance business fell in January after soaring to a record high level in December on improved weather conditions, industry data showed yesterday.

The average loss rate for the country’s nonlife insurers hovered around 90 percent last month, plunging from a whopping 109 percent a month earlier, according to the data.

Samsung Fire & Marine Insurance, the country’s top nonlife insurer, saw its loss rate stay below 90 percent in January, falling sharply from the unprecedented level of 107 percent over the cited period, the data added.

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

“Due to a fall in the number of heavy snow days last month, the loss rate decreased significantly from the worst performance tallied in December,” an official from Samsung Fire said.

Meanwhile, market watchers said local nonlife insurers may continue to suffer operating losses down the road despite the improvement as loss rates may jump back in February and March on the prolonged cold snaps.

“Nonlife insurers are still suffering from car insurance premium cuts last year,” an official from a local insurer added.

Korea’s car insurance premiums were slashed by 2.5 percent in April 2012 under government pressure to battle against inflation.

The country’s nonlife insurers reported a combined operating loss of 200 billion won ($184 million) over the April-December period in 2012.

The insurance firms close their books on March 31.

The average loss rate for Korea’s nonlife insurers hovered around 85 percent over the cited period, surpassing the industry’s break-even point of 77 percent, the data added. Yonhap