South Korea’s auto insurance sector is expected to grow by 2.4% this year, driven by higher vehicle sales, increased premium rates, and a rebound in third-party liability coverage, according to data from GlobalData.
Motor third-party liability insurance (MTPL), which accounts for 12.8% of total motor insurance premiums, has returned to growth after three consecutive years of decline. The remaining 87.2% of premiums stem from comprehensive motor coverage.
GlobalData forecasts that South Korea’s motor insurance market will expand at a compound annual growth rate (CAGR) of 4.5% between 2025 and 2029, with gross written premiums (GWP) projected to climb from $15.6 billion in 2025 to $18.6 billion by the end of the forecast period.
Motor insurance continues to dominate the country’s general insurance market, comprising 58.3% of total general insurance premiums in 2024.
In recent years, the sector’s growth had slowed due to a slump in new car sales. However, the trend is reversing amid a recovery in vehicle sales and rising premium rates.
A surge in road accidents and rising labor costs has led to higher loss ratios, contributing to expectations of further premium increases in 2025. Data from the Financial Supervisory Service shows the average loss ratio among South Korea’s top four non-life insurers rose to 92.4% in November 2024, up from 81.5% a year earlier.
Traffic accidents also climbed from 1.78 million in the first half of 2023 to 1.84 million in the same period of 2024. Analysts anticipate this upward trend will continue, keeping loss ratios above 80% through at least 2026.
Insurers are also adjusting to the rising market share of electric and hybrid vehicles, which carry higher insurance costs due to risks such as battery fires and elevated repair expenses. According to the Korea Automobile Manufacturers Association, EV sales in the third quarter of 2024 were up 47% year-on-year.
The South Korean government aims for all new domestic vehicle sales to be electric by 2040.
Despite premium increases, the growing popularity of usage-based insurance and digital distribution channels is putting pressure on pricing, contributing to a weaker market environment and squeezing profit margins.
“The outlook for South Korea’s auto insurance market is positive, supported by regulatory reforms and the rising penetration of electric vehicles,” said Swarup Kumar Sahoo, Senior Insurance Analyst at GlobalData. “Additionally, the projected increase in road accidents between 2025 and 2029 is expected to drive demand and support industry growth.”
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