Auto insurance premiums rose for the first time in five years—but losses hit 100 billion won in one quarter

Non-life insurers in South Korea lost around 100 billion won on auto insurance in the first quarter of 2024, despite raising premiums for the first time in five years. The loss ratio hit 86–87%, well above the 80% break-even threshold, meaning every policy sold deepened the deficit. The damage stems from four straight years of government-pressured premium cuts—average rates fell from 723,434 won in 2022 to 691,903 won in 2024—and a surge in costly claims driven by over-treatment. A 1% rate increase in January, visible in March renewals, was too small to offset the imbalance. At the core of the cost surge is the misuse of premium hospital rooms at oriental medicine facilities, where daily fees run up to 650,000 won—20 times the cost of general rooms. Payouts for treatments at these clinics ballooned from 8.95 billion won in 2020 to 32.01 billion won in 2023. Room fees alone for auto injury patients in high-tier rooms climbed from 24.5 billion won in 2023 to 27.8 billion won in 2025. Some clinics, operating no general wards, actively promote 'hocance'—luxury recovery packages—via social media. Current rules allow premium rooms for up to seven days only when medically justified or general rooms are full. But enforcement is weak. The 'eight-week rule', which would require re-evaluation for extended treatments, has stalled due to medical sector resistance. With regulators still pushing for premium discounts under the five-part vehicle system, insurers are questioning whether auto insurance has become a social service rather than a viable product.