Insurers win some, lose some during the pandemic

Insurance companies reported a mixed first half as life insurers earned less, largely on the need for higher provisioning for guaranteed products, while non-life companies did better on year as fewer car crash claims came in.

The figures were released by the Financial Supervisory Service (FSS) on Monday.

In the first half, life insurance companies reported 2.7 trillion won ($2.3 billion) of net income, down 2.6 percent on year. They made 13.2 trillion won on investments, 877.1 billion won more than in the same period last year, but lost 12.66 trillion won selling insurance, a loss 832.5 billion won larger than in the same period in 2019.

The companies increased their provisions for variable insurance to 1.71 trillion won, up 155 percent on year. They are required to reserve against these products in order to meet return obligations. Weak returns on the markets forced them to put away much more than last year.

Premium income rose by 3.7 percent to 4.16 trillion.

Net income of non-life insurance companies during the first half was 1.72 trillion won, 15.5 percent higher than in the same period last year. This is due to a dramatic decrease in outdoor activity during the outbreak, causing a drop in the number of car accidents. The rate of loss for car insurance was 84.3 percent, a 3.2 percentage point on-year decrease.

Non-life insurance companies lost 125.4 billion won on auto insurance in the first half, a 294 billion won smaller loss than in the first half of last year.

Profit from investments in stocks, bonds and other assets was 4.50 trillion won during the first half, a 4.8 percent on-year increase. Original premiums, which are equivalent to sales, grew 6.5 percent on year 47.8 trillion won.

“The performance of non-life insurance companies is bound to go down after the torrential downpours hit properties like houses and farmlands in the July-August period,” said the FSS. “Investment profit may also suffer.”

BY JEONG YONG-HWAN [lee.jeeyoung1@joongang.co.kr]