South Korea’s auto insurance market has moved back into the red. The country’s five largest non-life insurers recorded a combined ₩10.5 billion loss from auto insurance in the first half of 2026, compared with a ₩126.1 billion profit in the same period of 2025. The result shows that the premium increases introduced earlier this year have not yet been large enough to absorb the pressure coming from claims and vehicle repair costs.
Key Takeaway
The important point for drivers is not simply that insurers raised premiums in February. The bigger issue is that the increase came after several years of lower pricing while the cost of settling claims continued to rise. That mismatch has left insurers with weaker underwriting results even after the first rate increase in five years.
Fast Fact
The five insurers covered in the latest result are Samsung Fire & Marine Insurance, DB Insurance, Hyundai Marine & Fire Insurance, KB Insurance, and Meritz Fire & Marine Insurance. Together, they moved from a profit of ₩126.1 billion in H1 2025 to a ₩10.5 billion loss in H1 2026.
Why the February Rate Increase Has Not Fixed the Problem
Major insurers increased auto insurance premiums by only 1.3% to 1.4% in February 2026, ending a five-year period without a broad increase. Samsung Fire & Marine and Hyundai Marine & Fire raised rates by about 1.4%, while DB Insurance and KB Insurance implemented increases of about 1.3%; Meritz also moved within the low-1% range.
The timing matters. Because motor policies renew at different times, the February adjustment was not immediately reflected across the entire portfolio during the first half of the year. That limited how much additional premium insurers could collect during the period.
The increases were also relatively modest compared with the cost pressures that had accumulated during the previous four years. In other words, the 2026 adjustment began correcting pricing, but it did not immediately reset the economics of the business.
Claims Costs Are Moving Faster Than Premiums
One of the clearest pressures is the cost of repairing damaged vehicles. Data reported earlier this year showed that property-damage payouts by Korean insurers reached about ₩9.5 trillion in 2025, up roughly 26% over four years. The four largest insurers alone accounted for about ₩8.06 trillion of those payouts.
The increase in payouts has been much faster than the growth in the number of claims. That distinction matters because it points toward higher severity per claim, rather than simply more accidents.
Parts, labor, and increasingly complex vehicle systems are contributing to that severity. Repairing newer vehicles can involve expensive electronic components, sensors, and specialized procedures, while higher workshop labor rates add to the final amount paid by insurers.
EV Repairs Add Another Layer of Pressure
Electric vehicles are an important part of the changing claims picture. The data you provided shows that the average insurance claim following an EV accident reached about ₩3.41 million in 2025, compared with approximately ₩1.96 million for gasoline-powered vehicles.
The difference becomes even more significant in severe incidents. Claims involving major EV events such as battery fires or explosions averaged about ₩16.68 million, illustrating why insurers have to account for substantially different repair and risk profiles as the vehicle mix changes.
This does not mean every EV claim costs more or that EVs alone caused the industry’s losses. Instead, EVs are one component of a broader shift in claim severity, repair technology, and underwriting risk.
The Numbers Show How Quickly Profitability Has Deteriorated
The latest H1 result follows a difficult 2025 for Korean auto insurers.
| Indicator | Result |
|---|---|
| H1 2026 result of top five insurers | ₩10.5B loss |
| H1 2025 result | ₩126.1B profit |
| H1 2026 loss ratio, four largest insurers | 84.5% |
| H1 2026 Q1 loss ratio | 85.9% |
| 2025 industry underwriting loss | ₩708B |
| 2025 industry loss ratio | 87.5% |
| 2025 combined ratio | 103.7% |
The Financial Supervisory Service’s 2025 figures provide an important longer-term benchmark. Auto insurers recorded ₩20.289 trillion in written premiums, down 1.8% from 2024, while the loss ratio increased to 87.5%. Adding the 16.2% expense ratio produced a 103.7% combined ratio, above the 100% underwriting break-even level.
That means the current weakness is not an isolated six-month event. It follows a deterioration that was already visible in the industry’s 2025 results.
What Happened at the Five Major Insurers
The H1 figures also show that the pressure was not evenly distributed.
KB Insurance moved from an ₩8.6 billion auto insurance profit in H1 2025 to a ₩35.8 billion loss in H1 2026. Hyundai Marine & Fire also moved into the red, changing from a ₩16.6 billion profit to a ₩10.2 billion loss.
DB Insurance remained profitable, but its auto insurance result fell sharply to ₩15 billion, an 80.7% decline from a year earlier.
Samsung Fire & Marine performed better in the second quarter, recording a ₩29.6 billion profit as selective underwriting and lower driving activity helped its results. But the improvement was not sufficient to erase its first-quarter weakness, leaving its first-half result at ₩20 billion, down 34.7%.
Meritz Fire & Marine improved from a ₩7.5 billion loss to a ₩500 million profit, although the recovery was too small to materially change the combined industry result.
Why the Second Half Could Remain Difficult
The second half brings a different set of risks. Summer rainfall and typhoons can increase accident and vehicle-damage claims, while holiday-period driving can increase exposure on the roads.
Repair inflation is another concern. The industry information you provided estimates that auto insurance costs could rise by around 4% in 2026, taking into account repair fees, medical expenses and accident frequency. If those costs continue to rise without a comparable improvement in pricing, some industry estimates put the potential full-year underwriting loss at more than ₩1.2 trillion.
That figure is a projection rather than a reported result, so it should not be treated as the industry’s confirmed 2026 loss.
The 8-Week Rule Could Matter More in 2027
Another important change is scheduled around the treatment of minor traffic injuries.
The so-called 8-week rule is designed to address prolonged treatment for minor injuries, particularly claims involving injury grades 12 to 14. The mechanism is not a blanket ban on treatment after eight weeks. Instead, cases extending beyond the threshold are subject to additional medical-necessity review. South Korea’s Financial Services Commission has also clarified that the reform should not be described as simply limiting accident victims to eight weeks of treatment.
The timing is particularly important for the current insurance results. Because the new framework applies to qualifying accidents occurring after its implementation, it is unlikely to materially change the insurers’ first-half 2026 numbers.
Industry and financial-sector estimates have suggested that the reform could eventually improve loss ratios and create room for premium stabilization. But those savings will have to be weighed against continuing increases in repair, medical and other claims-related costs.
What Drivers Should Watch Next
For consumers, the immediate question is whether the latest financial deterioration leads to another round of premium changes.
That is not automatic. Insurance pricing depends on claims experience, regulatory policy, competition, and the timing at which earlier rate changes flow through renewal portfolios.
The more important signal will be whether the loss ratio begins to fall after the 2026 pricing adjustment and upcoming claims reforms. If repair costs remain elevated while loss ratios stay above insurers’ sustainable levels, pressure for further pricing changes could remain.
At the same time, if the 8-week rule reduces prolonged minor-injury claims and insurers gain better control over repair payouts, some of the pressure could ease.
Bottom Line
South Korea’s auto insurance problem in 2026 is bigger than a single premium increase. The five major insurers moved into a combined ₩10.5 billion H1 loss even after raising rates, while repair and claims costs continued to put pressure on underwriting results. The 1.3%–1.4% February increases have started the process of correcting pricing, but their full effect will take time to appear. The next major test will be whether the combination of higher premiums, tighter claims management, and the 8-week reform can bring loss ratios back toward sustainable levels without creating another significant increase in drivers’ insurance costs.
Sources to cite in the article
- Seoul Economic Daily — Korea’s Auto Insurance Turns to Loss in H1 Despite Rate Hike
- Financial Supervisory Service data via KDI—2025 Auto Insurance Business Performance
- Yonhap—Car insurers’ 2025 net drops 84% due to rise in accidents
- Seoul Economic Daily—Auto Repair Overcharges Push Property Damage Insurance Payouts Toward 10 Trillion Won
- Financial Services Commission — Clarification on the 8-week treatment reform
