Domestic damage insurance companies are affected by auto insurance losses, leading to a decline in performance... Announcing an increase in insurance premiums

Major domestic property insurance companies recorded significant losses in the auto insurance sector last year, leading to a double-digit decline in overall earnings. The loss of hundreds of billions of Korean won in auto insurance was the main cause.

The five largest insurance companies—Meritz Fire & Marine, Samsung Fire & Marine, Hyundai Marine & Fire, KB Insurance, and DB Insurance—had a combined net profit of 74.297 trillion won last year, down 11.5% year-on-year. Operating profit was 9.0406 trillion won, down 8.9%; underwriting profit was 5.439 trillion won, a sharp decrease of 28.6%. These companies, especially in auto insurance, shifted from a surplus of 2.837 trillion won in 2024 to a loss of 4.585 trillion won last year, significantly impacting their performance.

All insurance companies turned to losses in auto insurance, with Meritz Fire & Marine’s losses widening further. Industry analysts believe that aggressive premium reductions driven by competitive pressures are one of the main reasons for deteriorating profitability. To reverse this trend, it is expected that premiums will be increased this year to reduce losses, but the process is unlikely to be smooth.

Additionally, long-term insurance profits and losses decreased to 5.1296 trillion won, an 18.1% decline. This reduction mainly stems from increased utilization of medical services after the end of medical strikes and larger gaps between expected and actual insurance payouts, leading to higher losses. In contrast, investment gains increased to 4.012 trillion won, up 39.3%, providing some buffer for company performance.

Overall, the analysis indicates that intensified competition in the auto insurance market and policy factors have had a considerable impact. While this trend may be somewhat alleviated this year through premium hikes and other measures, fluctuations are expected depending on market conditions and the economic environment. Insurance companies need to consider these factors and seek strategic responses.