Motor insurance leads S.Korea’s general insurance industry in 2020

The motor insurance segment grew by 11.7% in 2020.

Motor insurance was the largest segment in the South Korean general insurance industry, accounting for a 35.5% share in terms of gross written premiums (GWP) in 2020, according to a report by GlobalData.

The motor insurance segment grew by 11.7% in 2020, driven by the increase in premium rates and surge in registered motor vehicles.

Samsung Fire and Marine led the motor insurance market with a 29.5% share in 2020, followed by Hyundai Marine and Fire at 20.8%. Next is DB Insurance with 20.6% share and KB Insurance with 13.3%. These make the top four motor insurers who dominated the market, with 84.3% market share in 2020.

“Higher sales and business efficiency of top four insurers due to brand power and economies of scale have reduced the profitability of small- and medium-sized insurers. The top four insurers registered an average loss ratio of 91.7% in 2019, lower than the industry average of 92.9%, whereas other insurers registered an average loss ratio of 100.7%,” Swarup Kumar Sahoo, senior insurance analyst at GlobalData, said.

Sahoo said that to keep the loss ratio under control, small- and medium-sized insurers increased motor insurance premiums in 2020. This weakened their price competitiveness and led to a further reduction in their market share in 2020.

Meanwhile, Sahoo observed that despite the rapidly growing demand for electric vehicles, most insurers are reluctant to develop specialized motor insurance products for electric vehicles due to higher costs for repair and parts of these vehicles than those for ordinary cars.

“Growing electric vehicles sales and the launch of Level 3 autonomous vehicles will support the growth of motor insurance sales in the next few years. Pricing competitiveness is expected to increase the share of top four insurers and lead to further concentration in the South Korean motor insurance industry,” Sahoo added.

Amongst the top four insurers, only Samsung Fire and Marine and DB Insurance offer specialised motor insurance for electric vehicles.