South Korea’s non-life insurance companies saw their performance worsen in the first quarter due to the unexpected large-scale wildfires and heavy snowfall. Experts evaluate this as the beginning of the climate crisis having a tangible impact on their performance.

Daishin Securities Co. forecasted on Thursday that the combined net profit of the four major non-life insurers in Korea is estimated to have amounted to 1.58 trillion won ($1.09 billion) for the first quarter, down 30 percent compared to the same period last year.

The four insurers are Samsung Fire & Marine Insurance, DB Insurance Co., Meritz Fire & Marine Insurance Co., and Hyundai Marine & Fire Insurance Co.

Other brokerages that have released first-quarter earnings estimates for non-life insurers predicted about a 30 percent drop in net profit for the four major companies.

The main reason for the poor performance of domestic non-life insurers in the first quarter was the frequent wildfires.

Starting with the wildfire in Cheongdo, North Gyeongsang Province, in March, the country experienced the worst wildfires in its history, burning over 100,000 hectares of forest.

The damage went beyond property loss, resulting in 33 deaths and 45 injuries, highlighting the severe human toll as well.

Non-life insurers also suffered from actual-to-expected loss discrepancies in long-term insurance.

A/E loss refers to the difference between the predicted and actual insurance payouts.

This year, insurers failed in forecasting the claims payouts.

Samsung Fire & Marine Insurance, which posted 61 billion won in profit during the first quarter of 2024, is estimated to have swung to a loss of 18 billion won.

Hyundai Marine & Fire Insurance is projected to report a loss of 123 billion won, compared to 47 billion won a year ago.

The increased losses from wildfires are not limited to the four major insurers.

NH NongHyup Property & Casualty Insurance Co., which has a large number of farmer policyholders, is expected to shoulder losses in the 200 million won range due to the wildfires.

It is reported that 60 percent of all insurance claims filed from the wildfire damage in Gyeongsang Province.

The unexpected heavy snowfall in mid-March also led to a rise in car insurance loss ratios, further affecting the net profits of non-life insurers.

Analysts say the results underscore the growing financial risks posed by climate change.

In response, some firms are exploring ways to improve forecasting and risk management, viewing climate adaptation as both a challenge and a potential opportunity.

[ⓒ 매일경제 & mk.co.kr, 무단 전재, 재배포 및 AI학습 이용 금지]