(EDITORIAL from the Korea Times on May 19)

Greedy insurers
Don't delay in lowering premiums for auto insurance

Auto insurance policyholders have often complained that they are forced to pay
higher premiums than they deserve because insurers are only seeking profit at the
expense of consumers.

The average ratio of insurance claims to premiums dropped
to 69.8 percent last year, hitting a record low in six years. The ratio below the
70-percent mark means that local auto insurance firms have enough room to cut
premiums.
The nation's non-life insurance companies have enjoyed a combined total of one
trillion won or more in net profit each year since 2001. There is no doubt that
excessive premiums collected from auto insurance policyholders have greatly
contributed to solid profits.
Against this backdrop, the Korea Insurance Consumer Federation and other consumer
rights groups are calling for a cut in auto insurance premiums. They point out
that it is irrational for the insurers to refuse to ease the financial burden on
policyholders even though they continue to remain in profit. Of course, the
insurance claims-to-premium ratio showed a sudden fluctuation in the first four
months of this year. The monthly ratio surged to 76.3 percent in January and then
plummeted to 68.9 percent in February and 66.9 percent in March. But it rebounded
to 72.5 percent in April.
The rebound was attributable to an increase in car accidents as more drivers hit
the road amid plunging oil prices. For now, it is uncertain whether the ratio
will go up further or fall. But this uncertainty should not allow insurance
companies to justify their refusal to accept growing calls for lower premiums.
Insurers cannot deny that they have long reigned over policyholders, ignoring
consumer interests.
Everyone knows that insurance firms have been quick to raise premiums but slow to
curtail them. They are now under criticism for spending more on business
operations in an apparent bid to make it harder to slash premiums.
The percentage of operational expenses over premiums reached a five-year high of
31.8 percent on average in the October to December period of last year, up 1.3
percentage points from a year earlier. The figure means that insurance firms
spent 31.8 won of each 100 won in premiums on their operations. Green Non-Life
Insurance recorded the highest figure (40.7 percent), followed by Hanwha (40
percent), LIG (36 percent), Meritz (33.7 percent) and Hyundai (32.5 percent).
It goes without saying that insurance companies have spent too much to cover
their operational costs. If they cut the spending, they can collect lower
premiums from policyholders and maintain their profitability. Thus, it is
necessary for regulators to make sure those insurers who are lavish in
operational spending face stricter restrictions in the raising of premiums.
Greedy insurers have long been stigmatized for trying to pay as little as
possible in insurance payments when accidents occur. They should no longer be
engaged in the bad practice of pocketing policyholder money. It's time for
insurance companies to play fair and better protect consumer rights.
(END)