Car insurance premiums likely to rise

Insurers are moving to raise motor insurance premiums as the government has vowed to relax its tight control on prices.

Hyundai Marine & Fire Insurance Co. is slated to raise motor insurance prices for individual, corporate and business users by 2 percent within January, the latest in a chain of price hikes for small and medium-sized car insurance companies.

Hyundai Marine & Fire had been suffering from a high loss rate in the auto insurance sector, undermining the company’s overall performance. The loss rate in the motor insurance sector jumped to 91.8 percent, from 89.1 percent in 2014.

Earlier on Jan. 1, Hanwha General Insurance Co. raised insurance premium rates for corporate users by 3.9 percent. The rate for business users, such as taxis, also jumped 6.6 percent.

The rate hike march began with the Financial Services Commission’s announcement of a policy change in insurance pricing on Oct. 19, a move that counters the regulators’ tight grip on price controls.

The financial regulator’s road map for raising the competitiveness of the country’s insurance industries entitled insurance companies to freer pricing. In exchange, the FSC pushed insurance players to engage in financial technology, by launching more products that offer online registration.

Following the October announcement, medium-sized insurance firms, such as The-K, Heungkuk Fire & Marine Insurance and Meritz Fire & Marine Insurance, ventured for rate hikes at the end of last year.

Among them, Lotte Insurance showed the highest rate hike for auto insurance premiums, 6.6 percent for business and 7.2 percent for corporate users.

By Chung Joo-won (joowonc@heraldcorp.com)