Meritz Fire & Marine Insurance has decided to reduce auto insurance premiums for the third time this year, raising concerns that its move might spark a war in the local nonlife industry.
Meritz said last week that it would lower its auto insurance premiums for individuals by 0.8% starting 6 September. It has already cut the rates twice this year - 0.8% in March and 0.7% in June, reported Pulse News.
The company’s decision to reduce auto insurance premiums comes after it posted improved earnings on a reduced loss ratio, an unnamed Meritz official said, adding that the company expects the ratio to go further down.
Several major nonlife insurers have slashed their auto insurance premiums this year. Samsung Fire & Marine Insurance lowered its rate by 1.6% and Hyundai Marine & Fire Insurance by 1.5%. Dongbu Insurance and KB Insurance have also decided to chop their auto rates by 0.8% and 1.5%, respectively.
The insurance premium is a factor that consumers consider when deciding from which insurer they would buy their auto cover, because most auto policies are similarly designed.
Market experts see Meritz’s proposed move as a little risky. The company's combined ratio for the first six months of this year improved to 100.8% from 105.9% in the same period last year. This is higher than those of its larger rivals which is below 100%.
The latest price competition is expected to further widen the market share gap between large nonlife insurers and smaller peers, said an unnamed industry official.