Despite an increase in the number of private insurers providing storm and flood damage insurance, there has been a considerable surge in the average premiums. (Image courtesy of Yonhap)
SEOUL, Oct. 10 (Korea Bizwire) – Recent statistics show that premiums paid by customers for storm and flood damage insurance, providing protection against weather-related disasters such as typhoons, floods, and earthquakes, have seen an increase. However, the claim payout rates offered by insurers have remained static.
According to data presented by the Financial Supervisory Service (FSS) to the Political Affairs Committee of the National Assembly on Monday, the total number of subscriptions for storm and flood disaster insurance, encompassing both individuals and companies, reached 239,703 by May of this year.
This represents a notable decrease compared to the total subscriptions of 726,127 recorded last year. Nevertheless, it is expected that the number of subscriptions from June to December will exceed last year’s figure.
Despite an increase in the number of private insurers providing storm and flood damage insurance, there has been a considerable surge in the average premiums. Seven insurers, namely Samsung Fire, Hyundai Marine, KB Insurance, DB Insurance, Nonghyup Insurance, Meritz Insurance and Hanwha Insurance offer these policies.
The number of companies offering these policies grew from five in 2021 to seven in 2022. The average premium per policy has also experienced a sharp rise, jumping from KRW 528,200 for individuals and KRW 46,500 for companies last year to KRW 739,938 for individuals and KRW 95,177 for companies this year.
Despite these changes, claim payments have remained stagnant even as premiums have risen. Premiums increased from 42.29 billion won in 2021 to 72.53 billion won last year, reaching 43.26 billion won as of May of this year. However, the amount paid out in insurance claims was 15.38 billion won in 2021, 23.11 billion won last year, and 11.01 billion won this year.
This year’s payout ratio increased to 82 percent for individuals and 68 percent for businesses, but the payout-to-premium ratio remains low. This ratio, which represents the amount paid out as a percentage of the total contract value, was only 0.3 percent from 2021 through May of this year, with businesses faring even worse at just 0.01 percent.
In line with these trends, insurers are experiencing a surge in expected profits. Expected profits, calculated by deducting 30 percent of business expenses from raw premiums and further subtracting insurance payouts, have been on the rise since turning positive in 2021.
As of May, they were estimated at 6.88 billion won, up from 6.81 billion won in 2021, 10.03 billion won last year, and 6.58 billion won this year.
M. H. Lee (mhlee@koreabizwire.com)
