Win-win requires process
Car companies can not only increase their income, but also pull in the distance with consumers. Insurance companies can get more accurate data to reduce their own loss risk. Consumers no longer have to save on fuel premiums to pay premiums and enjoy more user-friendly car insurance products. This win-win situation requires a process, and more car companies and insurance companies need to cooperate and gradually open the curtain of the new auto insurance era.
Source: Zinc Finance
Author: Lu Shiming
Recently, WEILAI Automobile established Insurance Brokerage Co., Ltd., and Tianyancha showed that its registered capital was 50 million yuan, which was 100% controlled by NIO Holdings Co., Ltd. Traditional car companies involved in insurance business are not new, but there are not many new energy car companies involved in insurance.
In 2018, Xiaopeng Automobile was approved to carry out auto insurance agency business and established Guangzhou Xiaopeng Automobile Insurance Agency Company. Then in August 2020, Tesla registered Tesla Insurance Brokers Co., Ltd. in Hong Kong. Compared with Tesla and Xiaopeng, although Weilai Automobile entered the game relatively late, before that, Weilai Automobile was involved in the insurance field in the form of additional services.
【Source: Tianyancha】
Therefore, the trend of new energy vehicle companies involved in insurance is becoming more and more obvious. Unlike the traditional fuel vehicle companies that are roughly bundled, new energy vehicle companies cooperate with insurance companies in the form of agents.
However, in the face of the short history of the development of new energy vehicles, the technology still has a large room for improvement, as well as the fact that the digitization process of car insurance is still shallow, and the follow-up service system has not been built, the insurance amount of new energy vehicles will generally be much higher than that of fuel vehicles at the same price, and new energy vehicle companies still need to work hard to eat the cake of "car insurance", and for consumers, "expensive" new energy vehicle insurance will also be maintained for a period of time.
01
Expensive car insurance
In recent years, with the gradual expansion of the new energy vehicle market, the demand for new energy vehicle insurance has also increased accordingly. However, "expensive" is still the main theme of new energy vehicle insurance.
Zinc Finance also consulted a salesman of an insurance company, who said: "Before the reform of new energy vehicle insurance last year, the premium was similar to that of traditional fuel vehicles. But after the reform of many insurance companies have increased prices, take Tesla ModelY, did not change the previous 2 million insurance premium is also six or seven thousand, now the new car is about nine thousand a year, the same price of fuel vehicles have not changed, or about seven thousand. ”
According to the "New Energy Vehicle Industry Development Plan (2021-2035)", by 2025, it is expected that the sales volume of new energy vehicles will reach about 20% of the total sales of new vehicles, and by 2035, the annual premium of new energy vehicle insurance will increase to about 200 billion yuan.
However, before the release of the new energy vehicle exclusive insurance, the owner can only choose the traditional fuel vehicle insurance when applying for insurance, resulting in the battery, drive motor, electronic control and other aspects of the new energy vehicle protection scope is not comprehensive, for the vehicle thermal runaway risk, the insurance rights and interests are not detailed enough, and the price is much higher than the traditional fuel vehicle.
It was not until the release of the "Exclusive Clauses for Commercial Insurance for New Energy Vehicles of the China Insurance Industry Association (Trial)" in December 2021 that new energy vehicles had relatively standardized insurance documents, and problems such as spontaneous combustion of vehicles and three-electric systems were clearly included, and included the loss of auxiliary equipment such as charging piles and the property losses and personal injuries that the equipment itself may cause.
【Source: China Insurance Industry Association】
The release of this clause has made new energy vehicle insurance a huge difference between traditional fuel vehicle insurance products.
In theory, the release of exclusive insurance for new energy vehicles is a thing worthy of the happiness of car owners, after all, the protection is more reasonable and comprehensive. However, the release of captive insurance has caused dissatisfaction among many car owners. Shortly after the release of the exclusive insurance clause, the premium of new energy vehicles has undergone a round of price increases, and the original high-priced car insurance has been added to another level, which makes many car owners unacceptable.
A Tesla car said: "The total premium in the first year is more than 5,000 yuan, and the premium in the second year of this year has risen to more than 8,000 yuan." "Compared with the same price of fuel car insurance, the price has almost doubled." In addition, some netizens said that the premium increase of Xiaopeng, Ideal and Weilai also ranged from 20%-50%.
In addition to policy factors, the fundamental reason for the high level of new energy vehicle insurance is that the "insurance rate" of new energy vehicles is higher.
First of all, because the power of new energy vehicles will be directly output to the tires, the start is much faster than that of traditional fuel vehicles. This makes the owner uncomfortable in the early stage of driving, and it is easy to cause accidents such as rear-end collisions in congested road sections. Secondly, the "three electric system" of new energy vehicles is much higher than that of traditional fuel vehicles under the blessing of high technology. In addition, the special structure and dependence on the touch screen have led to the relatively higher compensation rate of new energy vehicles in the three insurances or car damage insurance.
According to China Bancassurance data, from 2016 to the first half of 2020, the overall insurance frequency of new energy vehicles was 3.6% higher than that of non-new energy vehicles, and the insurance rate of household new energy vehicles was even higher than that of non-new energy vehicles by 9.3%. According to the data of Shenwan Hongyuan Report, the current loss ratio of new energy vehicle insurance is close to 85% on average.
Under such a high payout rate, compared with traditional fuel vehicles, new energy vehicles are still "emerging" products, iterative fast, the products of various car companies are quite different, the accumulation of relevant insurance historical data is insufficient, and it is difficult for insurance companies to grasp the law of new energy vehicle failures, both to consider whether they can keep up with the times, and to consider whether they can keep pace with the times, so they have to set the insurance premium higher.
Knowing the crux of the matter, the data in the hands of various new energy vehicle companies has become the key to unlocking "high-priced car insurance". But as a car company, how can it easily hand over the data in your hands to the insurance company? Unless you "enjoy" the big cake of car insurance together.
02
Car companies kill two birds with one stone
In the long run, car companies involved in the insurance business can be said to kill two birds with one stone. One is that you can "divide" the insurance money with the insurance company, and the other is to make your car and the customer more closely connected.
Tesla, the first new energy vehicle company to realize self-insurance products, disclosed in the 2021 financial report that the company has launched insurance services in 5 states in the United States, and Value Penguin expects Tesla's average insurance cost per vehicle to be $4548 / year. Tesla expects that by the end of 2022, 80% of U.S. customers will choose Tesla insurance services.
If calculated on this basis, insurance services are expected to generate billions of dollars in additional revenue for the company in the future. In fact, this calculation is not an exaggeration.
Tesla CEO Musk once said: "Insurance will become Tesla's main product, and the value of insurance business will account for 30% to 40% of the value of the vehicle business." Some insiders have also estimated that if the Tesla car insurance model can be smoothly promoted, the loss ratio is expected to be reduced to 50%, the expense rate is 10%, and the operating profit margin can reach 40%, which is 5 times the current overall operating profit margin.
The main reason for such objective profitability is that car companies have obvious advantages in the new energy auto insurance market.
Insurance companies have limited ability to obtain new energy vehicle accident data, but car companies can obtain car owner data that insurance companies cannot reach, and they can also simplify the claim process of new energy vehicles like "de-intermediary" and design innovative car insurance products that are more compatible with claims.
Insurance itself is a probability business, with the blessing of a large amount of data, the pricing of car insurance products will be more accurate, naturally there is no risk of loss, only the question of how much to earn. However, the development of insurance products requires the qualification of insurance companies, and it is not possible for the "insurance broker" licenses of Weilai and Xiaopeng to complete. Therefore, car companies cooperate with insurance companies to develop new new energy car insurance products through the identity of "brokerage" companies, and enjoy this 100 billion cake together, which will become a trend.
In addition to considerable income, car insurance is also the first service product that consumers come into contact with when buying a car, and the rigid attributes and stickiness of car insurance enable dealers to control the service entrance of car owners, which can not only open up the whole life cycle of car owners, but also cultivate new business models and growth space.
In general, the profit margin of the after-sales service market of automobiles is much higher than that of automobile production and manufacturing. Some insiders said that the profit value created by automobile after-sales often accounts for 50-60% of the entire automobile industry chain. In today's era of "going to 4S", car companies continue to face consumers through self-operated stores, and future vehicle delivery is only the starting point for car companies to create value, and after-sales or car insurance will be used as the entrance to develop more services to make profits.
However, although the future is good, at present, car companies are also facing no small challenges in entering the car insurance business.
The first is the issue of license plates, a license plate of about 50 million yuan is just a "stepping stone" for car companies. The second is the service outlets, with the continuous expansion and sinking of the service market scope of car companies, the corresponding car insurance service outlets are also necessary, and the construction of this partial asset is difficult for the new energy car companies that are generally loss-making, and it is difficult to imagine the difficulty of layout in advance.
Finally, the service system, if the car company begins to sell insurance, then in order to realize the car company in the car machine and mobile end of the car insurance business, it is necessary to have a mature online system, to achieve quotation, payment, billing, claims, settlement, management and other functions, but also with the insurance company quotation, underwriting system in-depth docking, this project is more complex than the previous two problems.
As a just-needed market, new energy auto insurance has huge imagination space for its future development prospects. But how to compete for this big cake in the complex competitive landscape, independent car insurance products and new car insurance models may become the key.
03
Personalization is the trend
While car companies and insurance companies share the cake, consumers will also taste the sweetness.
According to the information on Tesla's official website, since January 2022, Tesla has launched a new insurance plan in some areas of the United States, and has successively provided Tesla's own insurance - the new "UBI" car insurance. Tesla captive insurance is 20 to 30 percent lower in price than traditional insurers and can be purchased on a monthly basis.
The reason for this effect is mainly due to Tesla's understanding of its own vehicles, through the integration of vertical resources such as advanced technology, safety and maintainability, which has contributed to the possibility of providing lower insurance costs.
Like Tesla, domestic new energy vehicle companies are also enthusiastic about the new model of "UBI" car insurance. The premium of the so-called new model of "UBI" car insurance will depend on the vehicle driven by the user, the driving location, the number of driving times, as well as the insurance coverage selected and the monthly safety score of the vehicle.
For example, the distance between the owner and the car in front of him when driving, the frequency of sharp turns, sharp acceleration, and sharp braking, and whether both hands have left the steering wheel at the same time, these data can be collected by the car company in real time through sensors and scored according to regulations. According to the mechanism, the higher the safety score, the lower the premium, and conversely, the owner with the lower score will have to bear the higher premium.
This new model of "UBI" car insurance may set off a change in the car insurance industry, and the key point of change lies in the use of sensors and big data by car companies.
In the general business form, information asymmetry is usually the seller has more information advantages than the buyer, because the seller is more aware of the quality of the goods they produce. In the insurance industry, information asymmetry is reversed, that is, buyers have more information advantages than sellers, such as car insurance.
Compared with insurance companies, car owners are more aware of their driving habits, but insurance companies cannot know the probability of insurance for each person, so they can only set an average premium. At present, motor vehicle insurance in the mainland is mandatory, so the average premium is unfair to consumers who drive legally and civilizedly.
However, with the help of sensors and big data, car companies can easily understand the driving habits of car owners and the health status of driving, and even understand the information during their driving process than the owners themselves, which largely erases the information asymmetry between insurance companies and customers.
All in all, compared with insurance companies, car companies with digital layouts can analyze vehicle and user data with more adequate backgrounds, so as to carry out more accurate and differentiated insurance pricing, and provide consumers with specific suggestions for relevant insurance types, which is undoubtedly a good thing for consumers.
However, this ideal car insurance market is still relatively distant.
On the one hand, in the face of the high cost of building an offline online car insurance business system, most new energy vehicle companies will still choose to cooperate with insurance companies. On the other hand, the main battlefield of car companies is fiercely competitive, even if they know the opportunities of new energy vehicle insurance, they often have more than enough and lack of strength. Therefore, in recent years, there will not be much difference in price between insurance run by car companies and insurance by car owners themselves.
What is certain is that it is an inevitable trend for car companies to continue to get involved in insurance, and new models of car insurance will eventually appear. As for when this win-win change of car companies, insurance companies and car owners will be realized, no one will know, but the market will always give the answer.
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