By Yoon Ja-young
Staff Reporter
Auto insurance companies recorded a surplus thanks partly to high oil prices in the first half of the year for the first time in seven years. While other financial businesses such as banks, asset management firms, and brokerage houses are suffering because of the global financial crisis, auto insurance companies are enjoying a surplus on top of high investment returns from bonds.
According to the Financial Supervisory Service (FSS), auto insurances recorded 5.5 trillion won in total sales for the first half ending in September, up 4.7 percent from a year ago.
They turned to surplus for the first time since 2001, with operating profits recording 10.7 billion won. Last year, they sustained operating losses.
They recorded a surplus thanks to the falling loss ratio, or the ratio of insurance money paid to subscribers compared with the insurance premium income of insurers.
The loss ratio stood at 68.3 percent, plunging 5.1 percentage points from 73.4 percent.
High oil prices were a boon for insurers in some ways, as an increasing number of drivers left their cars at home to use public transportation, and thus decreasing the number of accidents. The regulator also cited good weather as a factor that curbed loss ratio. Damage from typhoons or heavy rainfall was also small this year.
The report showed online direct auto insurers taking a bigger portion of the pie. They took 17.8 percent of the auto insurance market, up 2.3 percentage points from the previous year. The online auto insurance products saw a 20.1 percent sales growth.
Seeing the growth potential there, Samsung Fire & Marine Insurance recently announced it would advance into the online auto insurance market from next year. Kyobo AXA is the leader in this market with over a 40 percent market share, followed by ERGO Daum Direct.
The regulator, however, said the loss ratio could turn upward in the future following the recent plunge of global oil prices and insurance premium cuts. Dubai crude fell to below $60 per barrel from over $140 in July, while insurance companies cut insurance premiums by between two to three percentage points this summer.
chizpizza@koreatimes.co.kr
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