The motor insurance industry in South Korea is projected to grow at a compound annual growth rate (CAGR) of 4.5% from an estimated KRW20.9 trillion ($15.6 billion) in 2025 to KRW25.0 trillion ($18.6 billion) in 2029, in terms of gross written premiums (GWP), according to GlobalData, a leading data and analytics company.

According to GlobalData’s South Korea General Insurance Report, the South Korean motor insurance market is expected to grow by 2.4% in 2025. The growth will be supported by the recovery in motor third-party liability (MTPL) insurance after a continuous decline for three consecutive years, an increase in vehicle sales, and a rise in the premium rate. MTPL accounts for 12.8% of the motor insurance GWP, whereas comprehensive motor contributes 87.2%.

Swarup Kumar Sahoo, Senior Insurance Analyst at GlobalData, comments: “The South Korean motor insurance market is expected to grow with an increase in premium price, high premiums for electric vehicles (EVs), a rising share of EVs, and increasing traffic accidents. However, the growth will be slower due to the growing popularity of usage-based insurance and an expected increase in the unemployment rate due to the US tariff on automobile imports.”

Motor insurance, which accounted for 58.3% of the general insurance GWP in 2024, is the largest contributor to the general insurance industry. It registered slow growth in the last three years due to the decline in the sale of new vehicles. However, an increase in new vehicle sales and a hike in premium rates are expected to support the South Korean motor insurance GWP to grow at a CAGR of 4.5% during 2025-29.

Motor insurance premiums are expected to increase in 2025 as insurers registered high loss ratios due to increased traffic accidents and higher labor costs. According to Financial Supervisory Service (FSS) data published in December 2024, the average motor insurance loss ratio of the top four non-life insurers increased to 92.4% in November 2024, compared to 81.5% in November 2023.

FSS statistics reveal that the number of traffic accidents increased from 1.78 million in H1 2023 to 1.84 million in H1 2024. This trend is expected to continue in 2025, further eroding insurers’ underwriting margins, with the overall motor insurance loss ratio expected to remain over 80% in 2025 and 2026.

Sahoo adds: “The rise in the sale of fully electric and hybrid vehicles has prompted insurers to accommodate risks related to battery fire and high repair costs. The South Korean government aims to have all new cars be electric by 2040. Additionally, strict government regulations and transparency in battery sourcing have supported EV sales, which registered 47% growth in Q3 2024 compared to Q3 2023, according to Korea Automobile Manufacturers Association. The premium rates of EVs are higher than conventional vehicles due to the associated higher risks.”

However, the growing popularity of usage-based insurance and its online distribution has increased competition and led to a soft market condition. This has offset the overall increase in motor insurance premiums, impacting insurers’ profit margins.

Sahoo concludes: “The future outlook for the South Korean motor insurance market appears positive, driven by regulatory reforms and the growing adoption of EVs. Additionally, increasing traffic accidents are expected to drive the demand and support the growth of motor insurance during 2025-29.”