Rainy Season and Heatwaves Drive Up Auto Insurance Loss Ratios... Insurers Strengthen Countermeasures

95.7% of Flooding Accidents Occur Between July and October
Loss Ratios Rose to 89.7% Last Year

Delay in Implementation of the "8-Week Rule" Hinders Loss Ratio Improvement

Insurers Bolster Flood Prevention and Emergency Response Systems

As the risk of rain-related accidents and vehicle flooding increases due to heavy summer downpours, insurance companies are also expected to inevitably face a deterioration in their auto insurance loss ratios. The introduction of the '8-Week Rule', which had been anticipated to help improve loss ratios, has been delayed, prompting insurers to take their own measures such as strengthening flood prevention and emergency response systems.

According to the "Recent Five-Year (2021-2025) Vehicle Flood Accident Status" provided by the Korea Insurance Development Institute on July 13, 95.7% of vehicle flood accidents occurred between July and October, the period that includes the rainy season and typhoon season. Of the 1,531 vehicle flood accidents reported in 2021, 1,359 cases, or 88.8%, occurred during this period.

The proportion of vehicle flood accidents occurring between July and October out of the total was 95.9% in 2022, 85.9% in 2023, 97.6% in 2024, and 97.9% in 2025. In effect, nearly all flooding accidents occur during the summer and typhoon seasons. The number of flood accident cases also increased to 3,598 in 2024 and 5,745 in 2025, nearly quadrupling compared to 2021.

This is due to several factors: the heightened risk of rain-related accidents and vehicle flooding caused by heavy rain and typhoons in the summer, vehicle breakdowns resulting from heat waves, and the increased frequency of long-distance driving during the holiday season. During this period, not only does demand for compensation for flooded vehicles increase, but so does the demand for emergency services such as battery jump-starts and tire replacements, which in turn puts additional pressure on insurers' loss ratios.

Due to these seasonal factors, auto insurance loss ratios tend to be higher from July to October compared to the first half of the year. According to the non-life insurance industry, the average auto insurance loss ratio of the five major non-life insurers—Meritz Fire & Marine Insurance, Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, KB Insurance, and DB Insurance—rose by 7.0 percentage points from 82.7% in January to May last year to 89.7% in July to October. In 2024 as well, the loss ratio increased from 79.4% in January to June to 84.3% in July to October.

The auto insurance loss ratio is the ratio of insurance claims paid to the insurance premiums received by an insurer. In the industry, considering business expenses and other factors, the break-even point is generally regarded as around 80%. This year as well, the industry forecasts that seasonal factors will likely push the auto insurance loss ratio above the break-even point.

The introduction of the '8-Week Rule', which was expected to help improve loss ratios, is still at a standstill. The 8-Week Rule is a system that requires additional medical documentation if a patient with minor injuries from a car accident receives treatment for more than eight weeks.

To introduce the 8-Week Rule, it is first necessary to amend the Enforcement Decree and Enforcement Rules of the Automobile Accident Compensation Security Act, which fall under the jurisdiction of the Ministry of Land, Infrastructure and Transport. However, as amendments to the higher-level regulations have not yet been completed, the system has not been implemented.

With the introduction of the 8-Week Rule delayed, non-life insurers are strengthening their own responses to minimize the increase in loss ratios. Samsung Fire & Marine Insurance manages more than 1,300 flood-prone areas nationwide. KB Insurance has activated its emergency response process, while Hyundai Marine & Fire Insurance is preparing for flood vehicle compensation and emergency dispatches using its towing support network. AXA Insurance and DB Insurance are also expanding vehicle inspections and emergency dispatch services to prevent summer vehicle damage.

This content was produced with the assistance of AI translation services.