Exclusive clauses for new energy vehicle insurance came out Cross-border capital quietly entered the game

Reported by Guo Jingting, a reporter of this newspaper, in Beijing

The million new energy vehicle market has finally ushered in a new energy vehicle insurance that subverts the tradition.

On December 14, the China Insurance Industry Association developed and completed the industry's "Exclusive Clauses for Commercial Insurance for New Energy Vehicles (Trial)" (hereinafter referred to as the "Exclusive Clauses"), and risks such as batteries, spontaneous combustion, and charging that have attracted much attention have been included in the insurance coverage.

On the same day, the China Association of Actuaries also released the "New Energy Vehicle Commercial Insurance Benchmark Pure Risk Premium Table (Trial)". Compared with the current benchmark premium of the comprehensive reform of automobile insurance, the benchmark premium of the exclusive term new energy vehicle will be slightly reduced, about 0.8%.

At present, the frequency and compensation rate of new energy vehicles are higher than those of traditional fuel vehicles, and as the gap in the new energy vehicle insurance specification is filled, the dilemma of "shoes without heels" will be gradually alleviated.

In addition, the reporter of China Business Daily noted that with the advent of the era of new energy vehicles, the property insurance market after the comprehensive reform of automobile insurance will usher in a new growth point, and cross-border capital is also trying to participate in the industry.

The "last mile" pricing conundrum

As we all know, the core power system of new energy vehicles is composed of batteries, motors and electronic controls, which replace the engine, gearbox and other devices of fuel vehicles, so the protection of core components of traditional car insurance on automobiles is not suitable for new energy vehicles.

"Judging from some collected data, we suddenly found that the larger the screen of the new energy vehicle, the higher the probability of risk occurrence." At a forum at the 2021 CIIE, Gu Yue, chairman of China Pacific Property & Casualty Insurance Co., Ltd., shared such an interesting point when talking about the four major challenges that smart travel brings to insurance.

"There are two main aspects of risk pricing in the traditional insurance industry, one is from the car, and the other is from the person. In the traditional business model, more emphasis is placed on empirical data and historical data, but in the new environment, smart travel data is real-time, dynamic and continuous, so how to develop from the original from the car to the person to the real-time dynamic continuous comprehensive, from the original unified pricing, to the personalized pricing of thousands of people, is a big challenge. Gu Yue further said.

It can be seen that the understanding of new energy vehicles and car insurance by various subjects is constantly changing, and how to adapt the pricing of car insurance to new energy vehicles is a big challenge.

Shenwan Hongyuan insurance industry analyst Ge Yuxiang said that the current insurance company's enthusiasm for underwriting new energy vehicles is relatively poor, the insurance rate of new energy vehicles is much higher than that of traditional fuel vehicles, emerging businesses are often accompanied by higher risks and more uncertainty, compensation data is still in the accumulation stage, and insurance companies as a whole are in a passive state of pricing.

"New energy vehicle insurance is the 'last mile' connecting new energy vehicles and consumers, and how to effectively resolve the contradiction between the growing demand for new energy vehicle insurance protection by car owners and the poor enthusiasm of insurance companies on the supply side will be a common issue in the industry." Ge Yuxiang thinks.

In the process of vehicle use, in addition to the traditional traffic accident risk, the power battery fire, deflagration caused by major accidents constitute a new risk factor, for these risks, the need for product innovation, in the insurance protection and insurance services to achieve upgrading. Therefore, how to scientifically design insurance products under the condition of continuous iterative updating of technology and less accumulation of insurance experience data has become a topic that must be solved in the development process of new energy vehicle products.

According to the relevant person in charge of the China Insurance Industry Association, in order to draft and complete the "Exclusive Clauses", in the past year or so, the working group has visited dozens of major domestic new energy vehicle manufacturers, power battery manufacturers, national research institutes, data monitoring platforms and other dozens of institutions, held more than 20 forums in different forms, invited nearly 100 representatives from all aspects of society, and finally completed the draft on the basis of extensive research and repeated argumentation.

The "three electricity" is included in the scope of guarantee

It is understood that the "Exclusive Terms" include 3 main insurance and 13 additional insurance. The main insurance includes three independent types of insurance, including new energy vehicle loss insurance (hereinafter referred to as "vehicle damage insurance"), new energy vehicle third-party liability insurance (hereinafter referred to as "three insurance"), and new energy vehicle vehicle personnel liability insurance, and the insured can choose to insure all types of insurance or some of them.

The "Exclusive Clause" clarifies the definition of new energy vehicles, that is, vehicles that use new power systems and are driven entirely or mainly by new energy sources, including plug-in hybrid (including range extender) vehicles, pure electric vehicles and fuel cell vehicles, excluding motorcycles, tractors and special vehicles.

The most concerned thing is whether the battery, which accounts for half of the cost of the vehicle, is included in the guarantee responsibility. It is reported that the "Exclusive Clause" emphasizes "exclusive" and "customization", which clearly includes "three electricity" (that is, batteries and energy storage systems, motors and drive systems, and other control systems) into the scope of protection of vehicle damage insurance. At the same time, volkswagen's concern about the risk of spontaneous combustion of vehicles has also been included in the protection clause.

In the view of Shen Hua, vice president of China Property and Casualty Insurance, the liability limit of the three insurances can reach up to 10 million, and consumers can also choose to double the limit of statutory holidays to further resolve the social contradictions caused by spontaneous combustion.

"Driving, parking, charging, operating", the Exclusive Terms cover multiple scenarios. In recent years, charging pile leakage, fire accidents occur from time to time, the "Exclusive Clauses" not only covers the loss of the car, but also includes the loss of auxiliary equipment such as charging piles and the property loss and personal injury that may be caused by the equipment itself, which is the first time that car insurance has underwritten fixed auxiliary equipment outside the car, and is an innovation and exploration in the field of car insurance.

At the same time, the scope of protection is expanded to vehicle-specific use scenarios, such as self-service charging, special vehicle engineering operations, etc., and the connotation and extension of traditional car insurance are upgraded and optimized, and the applicability and pertinence of the terms are enhanced.

Humanized insurance protection is also taken into account, and the "Exclusive Clause" combines the risks in the charging process of new energy vehicles to design the "Additional External Grid Fault Loss Insurance" to cover vehicle losses caused by external power grid transmission and transformation failures, current and voltage abnormalities, etc., and disperse risks through the insurance mechanism.

In addition to the protection liability, the premium rate setting involves the pockets of millions of car owners.

Industry insiders told reporters that according to the rate calculation, from the perspective of pure risk rates, models below 250,000 yuan only fell and did not rise, and models above 250,000 yuan rose partially, but the overall number did not exceed 3%. The increase between car damage insurance and the three insurances is different, the car damage insurance is 60.2% fee reduction, 21% unchanged, 18.8% increase; the three insurance 25% fee reduction, 62% unchanged, 13% rise.

"Considering the actual pricing differences of insurance companies and the difference in everyone's needs for insurance, the overall price is about 50% down, 30% flat, and 20% up at such a level." The person predicted.

The current overall level of compensation rates for new energy vehicle insurance is relatively high, and the Exclusive Clauses take this into account and adjust the surcharge rate from 25% of the Model Clauses issued in 2020 to 15%.

In the face of the constantly updated and iterative new energy vehicle market, how does the Exclusive Terms adapt to the market? The Insurance Association took this situation into account in the development of the clause, "not only considering the current mainstream technology route, but also leaving room for innovation in the new format of the new energy automobile industry".

According to the analysis of CITIC Construction Investment, the promulgation of the "Exclusive Terms" will continue to implement the strategy of reducing fees and concessions under the background of keeping the car insurance premiums basically unchanged; on the other hand, it will also break the dilemma that the terms applicable to the industry's underwriting of new energy vehicles do not match the actual risks by standardizing the exclusive terms for new energy vehicles.

Race for a new track

Industry insiders said that "data" is the core of car insurance operations, insurance companies are subject to car companies in obtaining data, and insurance companies can only "follow the car" in product design, which means that car companies play an important role in the new energy vehicle insurance market.

According to the data, in the first half of this year, PICC Property & Casualty Insurance's new energy vehicle premium income was 4.03 billion yuan, an increase of 60% year-on-year, and the premium contribution was 3.3%.

The new energy auto insurance market is a new cake, and while insurance companies are competing for this incremental market, cross-border capital is also entering the market.

For example, the power battery giant Ningde Times entered the market, first in July this year, it invested in Xiaokang Life as desired, and 900 million yuan won 30% of the equity of Xiaokang Life, becoming the second largest shareholder of Xiaokang Life and pocketing the insurance license. Three months later, it signed a strategic cooperation framework agreement with PICC Property & Casualty Insurance to seize the new energy auto insurance market by taking advantage of its main business. Although CATL does not have underwriting qualifications, it can participate in battery risk management and insurance business.

The above cases are not an isolated case of cross-border capital entry, at the end of 2020, Geely Holdings had a top stake in United Property & Casualty Insurance, and won 33.33% of the shares of United Property & Casualty Insurance.

Of course, car companies want to enter the field of new energy car insurance, cross several hurdles, and need to spend a lot of manpower and financial resources to enter the car insurance track.

iResearch issued a report mentioned that first of all, there are certain problems for car companies to obtain the necessary operating licenses for carrying out car insurance business, and the national insurance agency license plate is a necessary operating qualification for car companies to carry out car insurance business, and it is necessary to set up regional branches to meet the conditions of localization operation in order to smoothly achieve business expansion, and the license plate is only a "stepping stone". Secondly, the model of direct sales requires car companies to have a fully functional online system, which not only has large construction costs and long time periods, but also has complex docking with the Baoshi system. In addition, car insurance has the characteristics of localization, and the nationwide offline service network is its tentacles to ensure user service, which needs to be accumulated for a long time.

Analysts at CITIC Construction Investment believe that after the standardization of underwriting responsibilities, it is expected that property insurance companies will increase the investment of new energy vehicles to obtain the "floating deposit" income formed by the cash flow of liabilities. At the same time, the additional insurance added in the "Exclusive Clause" can increase the average premium of insurance companies, and will also test the service ability and sales ability of insurance companies, especially large listed insurance companies with channel discourse power and richer offline network resources will benefit more.