Breaking through the difficulties of car insurance should "keep the stock and find increments" New energy vehicle insurance may bring new hope

"Source of this article: Securities Daily Network"

Reporter Leng Cuihua

The opening year of the "14th Five-Year Plan" of property insurance companies was not easy. In 2021, the most important auto insurance business in the property and casualty insurance industry will continue to shrink. The latest statistics from the China Banking and Insurance Regulatory Commission show that in the first 10 months of 2021, the premium income of automobile insurance fell by 6.98% year-on-year, while the amount of compensation paid in the same period increased by 16.27%.

The drop and liter of data reflect not only the results of China's comprehensive reform of auto insurance, but also reflect the current dilemma of the development of the auto insurance industry.

Looking forward to the future, only by continuing to deepen the reform can we consolidate the achievements of the reform and improve the company's operation. From the perspective of regulatory policies, the determination to benefit consumers will not change, and the average premium of vehicles will not rise significantly; and how to stabilize the stock and increase the increment of insurance companies is an important issue. On December 14, the Exclusive Clauses for Commercial Insurance for New Energy Vehicles (hereinafter referred to as the "Exclusive Clauses for New Energy Vehicle Insurance") were launched, and the new energy vehicle insurance market is highly anticipated. However, the current characteristics of this market are: fast growth and high payout ratio. Can the new energy auto insurance market bring new hope to insurance companies?

Premium income reduction claims expenses rose

According to the latest statistics of the Banking and Insurance Regulatory Commission, in the first 10 months of this year, the industry's auto insurance premium income was 625.519 billion yuan, down 6.98% year-on-year. In the same period, auto insurance claims were 430.638 billion yuan, up 16.27%.

On September 19 last year, the comprehensive reform of automobile insurance was officially implemented. 2021 is the first full operating year after its official implementation, and the actual performance of the auto insurance market is in line with the short-term goals of the reform: price reduction, insurance increase, and quality improvement.

The relevant person in charge of the Banking and Insurance Regulatory Commission recently said that as of the end of September this year, the average premium paid by vehicles was 2763 yuan, which was 21% lower than before the comprehensive reform of automobile insurance, and the cumulative reduction of expenditure for China's automobile insurance consumers since the comprehensive reform of automobile insurance exceeded 200 billion yuan, and 87% of consumer premiums have declined.

However, from the perspective of the company's operation, 2021 for property insurance companies is very difficult. Auto insurance, which was once well-underwritten and profitable, has suffered industry losses, and small and medium-sized insurance companies have borne the brunt. "The wind is gone, the tide is receding." On the development status of the auto insurance industry, Shi Hui, general manager of The Property & Casualty Insurance, wrote in August this year that the comprehensive cost ratio of the industry is rising steadily, and large and small companies have felt unprecedented pressure, and it is difficult to breathe.

The decline in premium income and the rise in claims have led to a significant decline in the operating indicators of motor insurance of property insurance companies. According to the relevant industry statistics obtained by the reporter, the underwriting profit of automobile insurance from 2017 to 2020 was 7.389 billion yuan, 1.053 billion yuan, 10.36 billion yuan and 7.957 billion yuan, respectively. This year, the comprehensive cost ratio of motor insurance continued to rise, exceeding 100% by the end of July, which means that from the perspective of the whole industry, car insurance underwriting fell into a comprehensive loss. The person in charge of a medium-sized insurance company told reporters that it is expected that the comprehensive cost ratio of automobile insurance will continue to rise, and may reach a peak in 2022.

Due to the increasing pressure on underwriting losses, the phenomenon of insurance companies refusing to insure operating vehicles has become more common, and it is difficult to cover the risk protection needs of operating vehicles only by applying for compulsory compulsory insurance.

The Luoyang Branch of Henan Banking and Insurance Regulatory Bureau proposed that due to the long-term high compensation rate of operating vehicles, the actual underwriting cost is much higher than 100%, coupled with the return of the insurance pricing of each model to the actual risk of this model after the comprehensive reform of automobile insurance, the insurance industry's ability to bear and digest the loss of high-risk business has decreased significantly, and a number of insurance companies have re-assessed the risk of high-risk models such as operating vehicles from the headquarters level, gradually accepting underwriting authority and setting strict underwriting conditions, and finally forming a problem of operating vehicle insurance.

To this end, the China Banking and Insurance Regulatory Commission recently issued the "Notice on Effectively Doing a Good Job in Underwriting The Insurance of Operating Vehicles" to all property insurance companies, requiring all property insurance companies to resolutely put an end to any form of refusal or delay in underwriting compulsory insurance, and proposed to severely crack down on illegal acts in the underwriting of operating vehicle insurance.

However, industry insiders believe that behind the fancy refusal of insurance companies is the helplessness of their operating losses, and the regulatory issuance may solve the urgent need, but the deep problems faced by the auto insurance market need to be fundamentally solved. Continue to deepen the reform of auto insurance, how can the industry get out of the overall loss? How to solve the difficulty of insuring some vehicles? These are all questions that require deep thought.

New energy vehicle insurance is an opportunity

In the face of the difficulties of automobile insurance, "holding the stock and looking for increments" is the development idea of most insurance companies. The core of stabilizing the stock lies in improving the quality of service and increasing customer stickiness. And from the perspective of incremental markets, where is the biggest opportunity? People in the industry generally believe that it is new energy vehicle insurance.

First of all, new energy vehicles are ushering in explosive growth. According to data released by the Ministry of Public Security, as of the end of June this year, the number of new energy vehicles in the country reached 6.03 million, accounting for 2.06% of the total number of vehicles. The "New Energy Vehicle Industry Development Plan (2021-2035)" proposes that by 2025, the sales volume of new energy vehicles will reach about 20% of the total sales of new cars.

"The growth of automobiles will drive the release of demand for new energy vehicle insurance." Xie Fei, senior underwriter of China Reinsurance Insurance, told reporters that if it were not for major technological mutations, it would be an inevitable trend for new energy vehicle insurance to take over traditional fuel vehicle insurance. According to reports, according to the scrapping period of traditional fuel vehicles, by 2035, the annual premium of new energy vehicle insurance in the whole industry will be increased to about 200 billion yuan.

Secondly, the exclusive clause of new energy auto insurance has been officially launched, which will help the market to flourish. On December 14, the China Insurance Industry Association officially released the exclusive clause of new energy vehicle insurance. Zhang Lei, CEO of AutoMotive Technology, told reporters that in terms of insurance liability, the exclusive clause of new energy vehicle insurance not only provides protection for the "three electricity" system, but also covers the use scenarios of car driving, parking, charging and operation; in the development of terms, it not only considers the current mainstream technical route, but also leaves room for innovation in the new format of the new energy automobile industry.

Although the market potential is huge, the high loss rate of new energy vehicle insurance is also a reality that must be faced. Ge Yuxiang, an analyst at Shenwan Hongyuan Securities, said that the current loss ratio of new energy vehicle insurance generally exceeds 85%, and the industry is facing greater underwriting loss pressure. Due to poor pricing ability and weak customer screening ability, the comprehensive cost ratio of new energy vehicle insurance exceeds 110%, and the head company basically maintains underwriting breakeven by virtue of its natural advantages in pricing, customer reserves and manufacturer cooperation capabilities.

Li Xiaofei, chief actuary of China Reinsurance Insurance, told reporters that while the exclusive terms of new energy vehicle insurance were introduced, the regulatory authorities required that its additional expense rate should not be higher than 15%, which means that the cost rate of exclusive products of new energy vehicle insurance will show a downward trend. At the same time, according to the "Explanation on the Adjustment of the Pure Risk Premium Table of the Benchmark Pure Risk Premium Table for New Energy Vehicle Commercial Insurance Exclusive Products", the loss ratio of most new energy vehicles may rise. Of course, the variables to be considered are also the changes in the risk profile of new energy vehicles, and how their higher insurance frequency and maintenance costs change.

There is a divergence in the attitude of insurance companies towards new energy vehicle insurance. "For the industry, new energy vehicle insurance is undoubtedly the protagonist of the incremental market, but there are different answers specific to each market player." For our company, at present, new energy vehicle insurance is not an incremental market, and we choose to sink to the rural market. The person in charge of the above-mentioned small property insurance company told reporters.

In the interview, the reporter learned that the risk of new energy vehicles is quite different from that of traditional fuel vehicles, and the insurance rate is high, resulting in some small and medium-sized insurance companies being discouraged or shallow. At present, Xiaopeng Automobile and Tesla have set up their own insurance brokerage companies, and CATL and Chinese Insurance have signed strategic cooperation agreements. Zhang Lei believes that after the rise of the new energy vehicle direct operation model, car insurance will become a super entrance for car companies to serve car owners, and reshape the relationship between the two, from sales to user life cycle management, there will be more car insurance direct sales from car manufacturers, especially the first insurance of the car.

Therefore, there is still a lot of uncertainty about whether new energy vehicle insurance can bring new hope to insurance companies. The difficult side shows courage and perseverance, and the grinding begins with Yucheng. Industry insiders believe that in the process of in-depth reform, insurance companies will also practice greater skills, seize opportunities, and achieve better development.