South Korea’s auto insurance sector returned to a deficit last year, as declining premiums and rising loss ratios drove all 12 non-life insurers into losses within their auto insurance divisions. According to the Financial Supervisory Service’s preliminary report on 2025 auto insurance business performance, total net profit for the sector fell sharply to 95.1 billion won (approximately $63.4 million), down 83.9% from the previous year’s 589.1 billion won. While investment income helped maintain an overall net surplus, core underwriting operations recorded a substantial deficit.
The actual underwriting loss totaled 708 billion won, widening the gap by nearly 700 billion won compared to 2024. The combined ratio for auto insurance reached 103.7%, surpassing the break-even threshold and reflecting a structurally deficit-prone market. Premium income also declined slightly, with direct written premiums totaling 20.289 trillion won, down 1.8% from the previous year. This decrease was attributed to slower growth in the number of insured vehicles and the effects of premium cuts implemented in recent years.
Rising costs fueled the worsening loss ratio, which increased 3.7 percentage points to 87.5%. Although the total number of car accidents grew modestly by 0.3% to 3.838 million, the incurred losses climbed 2.2% due to higher expenses for hospital treatments, auto parts, and repair labor. Specifically, oriental medicine treatment costs rose 6.2%, conventional medical treatment by 3.2%, parts by 6.0%, and repair labor charges by 2.9%.
Among major insurers, Samsung Fire & Marine Insurance posted the largest deficit at 146.1 billion won, followed by Hyundai Marine & Fire Insurance (-92.6 billion won), KB Insurance (-79.2 billion won), and DB Insurance (-66.6 billion won). Smaller and mid-sized companies also reported losses, with Hanwha General Insurance at -70.2 billion won and Meritz Fire & Marine Insurance at -59.7 billion won. Online-only insurers were not spared, with AXA General Insurance, Hana General Insurance, and Carrot General Insurance recording deficits of -40 billion, -44.1 billion, and -48.3 billion won, respectively.
The market remains dominated by four major insurers, which together account for 85% of the market, despite a slight decline in their combined share. Small and mid-sized insurers increased their market share to 9.4%, while online-only insurers’ share fell to 5.6%. In terms of sales channels, face-to-face sales continued to decline, dropping 1.7 percentage points to 46.1%, while online sales rose to 37.4%.
The Financial Supervisory Service stated it will continue pursuing institutional reforms in consultation with related agencies to reduce the auto insurance loss ratio. The FSS emphasized it will aim to curb excessive medical treatments without disadvantaging legitimate accident victims and will oversee the process to ensure that these reforms contribute to future premium reductions.
