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Car Insurers | Booming Business Causes Car Insurers Losses
Posted By: admin on July 22, 2010 at 12:54 am
In many industries, a growing market would be welcome news – but not for auto insurers. They are suffering losses even as the amount of insurance policies increases. But amid increasing costs and a high number of claims, insurers are hesitant to increase insurance premiums in fear of a public backlash.
According to industry sources, the automotive insurance sector in Korea grew 7.5 percent in April to June of 2010 – but insurance firms are struggling with a high loss ratio on car insurance policies.
The loss ratio refers to the amount paid for insurance claims out of the premiums paid by policy holders.
General insurance companies are faring well because car insurance takes up about 25 to 30 percent of their entire business, said Koh Bong-joong of the Korea Non-life Insurance Association (KNIA). But firms that deal solely with car insurance are experiencing regular losses.
The high loss rate for car insurance in Korea has become chronic since car insurance is mandatory for every owner, while Korea also has one of the highest automobile accident rates in the world. According to a 2007 tally of OECD countries car accident
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