Auto insurers face a sharp increase in claims from rain damage that has caused at least 41 deaths in the capital area since Tuesday.
More than 400 millimeters of precipitation was recorded in Seoul between Tuesday and Wednesday, causing a landslide at Mount Woomyeon and at least 16 deaths in the city’s south.
Car insurers are expected to see a major decline in profits for the month as they were already dealing with more than 3,990 reports of car damage as of Thursday morning, the Financial Supervisory Service said.
Imported cars are stranded on a submerged street due to heavy rain in Seocho-dong, southern Seoul, Wednesday. (YuTube capture)
The industry is expected to pay out an estimated 27.5 billion won ($26.1 million) to subscribers.
The damage is likely to rise further as damage to submerged, luxury cars in the stores concentrated in the wealthy Gangnam area has not been reported.
The financial regulator said the average loss rate for car insurers, the claims paid out compared to premiums collected, would rise by about 3 percentage points in July.
Analysts said the size of losses incurred by insurers was difficult to determine as claims are still to be made.
“The record downpours damaged over 2,000 cars and 700 buildings. Auto insurers will see a decline in their net income but even if damages are more than double of the size of now, the industry will only see about 0.6 percent profit decrease,” Lee Tae-kyung, an auto analyst at Hyundai Securities said.
Auto insurers fell as much as 5 percent on average mid-day Thursday.
The loss rate of non-life insurers hit the highest level last year, 80.3 percent, incurring more than 1 trillion won in losses for car insurers. The rate is widely expected to stand at around 70 percent this year.
By Cynthia J. Kim (cynthiak@heraldcorp.com)
