Korea Non-Life Trimming Staff

Non-life insurers are trimming their workforces in motor insurance sales channels, to cut operating costs amid falling revenue and rising loss ratios. Industry officials said the outlook for the business remains murky, as they cannot control the price of insurance independently despite declining profitability, in the face of the government's tight regulations.

Motor insurance is mandatory and the government controls the premium rates. Insurer cannot raise its auto insurance premiums to the level it wants, which means it has to find other ways to offset rising loss ratios.

Last year, Lotte Non-Life Insurance downsized almost half of its workforce in its auto insurance telemarketing sales channel, in a bid to reduce what it believed to be "inefficient expenses".

"The decision reflects customers' growing preference for online subscription channels," a company official said. "Fewer people rely on telemarketers when they sign or renew their auto insurance."

Other mid-tier life insurers such as Hanwha General Insurance are also slashing their headcount. The Hanwha affiliate accepted voluntary resignations last year, and 30 officials left.

Motor insurance profits keep declining due largely to an increase in car repairs and maintenance costs, with more customers purchasing overseas luxury vehicles.