South Korean non-life insurers saw the number of monthly car claims reach a fresh high in July, due to damages triggered by the record downpours that pounded the metropolitan area last month, data showed Monday.
A total of 11,362 reports on car damages were received in July, with local insurers expected to pay out an estimated 80.1 billion won ($73.8 million) in compensation to policyholders, according to the data by the Financial Supervisory Service. The figure translates to around an average of 7 million won worth of damage per car.
The July numbers compare with the previous record of 11,198 damage cases worth 35.7 billion won reported in September 2010, when Typhoon Kompasu struck the nation.
“The floods completely submerged a substantial number of cars, which resulted in higher maintenance costs than cars damaged due to other reasons,” an FSS official said.
Due to the damages, the average loss rate of non-life insurers reached 77.6 percent in July, accelerating from 73.3 percent in June, according to the FSS. The loss rate measures the amount of money paid in claims from premium income. A higher loss ratio indicates lower profitability for insurers.
Market watchers said hefty compensations on claims are expected to erode profits on non-life insurers, who also suffered sharp losses in their auto insurance businesses last year.
“We did see earnings rise in the fiscal first quarter, thanks to investment profits. But due to damages from the floods and seasonal factors in the second half of the year, we expect to see a further rise in loss rates down the road,” said an industry official.
“Despite an increase in losses, it seems the industry won’t be able to move to raise premiums since it received wide criticism after hiking premiums last year,” he said.
