“No Money for Automobile Insurance”

The automobile insurance market has moved into the red for the first time in five years, and small and medium-sized non-life insurance companies are raising their premiums by one to three percent starting next month.

According to the non-life insurance industry on March 26, small and medium size companies are raising their premiums because the level of automobile insurance damages has increased and has been afflicting the industry.

The adjusted rate would be within ±5% of the standard premium of each company.

Small and medium-sized insurance companies such as ShinDongA, First, Ssangyong, Daehan, and others plan to raise their automobile insurance premiums by one to three percent next month.

With the increased rate, an insurance holder who pays a monthly premium of 500,000 won will now pay an extra 5,000 to 15,000 won per year.

Larger insurance companies like Samsung, Hyundai, LG, Dongbu, Dongyang are not planning to adjust their premium rate after lowering their rates due to competition around the end of last year.

Meanwhile, the premium income that insurance companies earned during the 2003 audit year from April 2003 to February 2004 lowered from 7,242.6 billion won last year to 7,207.1 billion won, a decrease of 35.5 billion won.

Therefore, experts forecast that the automobile insurance industry will record minus growth for the first time since its first audit year in 1998 unless it experiences a sudden, large increase in their premium earnings in the last month of the audit year which is this month.

The automobile insurance industry experienced a premium income increase to 6,176.5 billion won in 1997 and also experienced a sudden, large decrease to 5,280.5 billion won in 1998 right after the financial crisis. However, income recovered to 5,536.8 billion won the next year and has recorded constant increases with 6,498.3 billion won in 2000, 7,460.1 billion won in 2001, and 7,913.8 billion won in 2002.

A related official in the industry analyzed the phenomenon, saying, “Due to the recent economic stagnation, there is an increased number of people who are avoiding applying for insurance policies, and online automobile insurance companies are growing their market share since their rate is 15 percent cheaper on average.”

Keuk-In Bae bae2150@donga.com