Axa General Insurance Co., the Korean branch of French multinational insurance firm, will raise its auto insurance premiums this year again after last year’s rate increase in a move to further ease deficit in its auto insurance sector. Its action is expected to affect others in the non-life sector.

The General Insurance Association of Korea said on Monday that Axa that introduced the first online auto insurance coverage in Korea in 2001, notified that it will raise the car insurance premium for corporate and business users on average by 4.7 percent and for individual by 0.5 percent staring Saturday.

An official from Axa said that the company has decided to raise its premium again to further reduce the loss ratio in its motor insurance segment. Since the company first raised its auto car premiums last year, its net profit for the January to June period this year had increased by more than nine-fold on year to 39 billion won ($34 million) and the loss ratio in the auto segment had fallen from 84.36 percent to 79.07 percent over the same period.

Other major non-life insurers in the country including Samsung Fire & Marine Insurance Co., Hyundai Marine & Fire Insurance Co. and Dongbu Insurance Co. that have hiked their auto insurance premiums following Axa since last year also have posted big gains in their net income for the third quarter this year thanks to the drop in the auto loss ratio.

When Axa raised its car insurance premium for individuals by 5.4 percent and for businesses by 4.5 percent in July last year, all 11 local car insurance providers acted synchronously. Concerns are rising that Axa’s latest decision would once again prompt other insurers to raise their premiums this year.

“We don’t have any immediate plan for a rate hike yet, but it’s true that insurers want to further reduce the loss ratio by simply raising premiums rather than coming up with other cost cutting measures,” an official at a local non-life insurance company said.

By Park Joon-hyung

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]