The decision came after credit card firms notified insurance firms of a 30 percent hike in transaction commission fees.
Major insurers, such as Samsung Fire & Marine Insurance and Dongbu Insurance, had planned to provide policyholders with cheaper premiums for automobile insurance.
They argued that the estimated loss ratio will weigh down their future performance.
They posted an operating loss of 26.3 billion won in the auto insurance business as of September, with their cumulative loss ratio reaching 80.2 percent.
The decision will likely cost nonlife insurers an additional 75 billion won per year for the fees incurring from auto insurance alone. Last April, insurers cut the auto insurance premium by 2.5 percent under pressure from the country's insurance watchdog.
Moreover, online-based auto insurers have posed a threat to existing insurers as their market share increased to 26 percent.
Nonlife insurers said their combined loss has amounted to 7 trillion won since fiscal 2011.
reporter
Park Sae-jin
swatchsjp@ajunews.com