Summary
The pricing mechanism of new energy vehicle insurance will be adjusted, and the problem of car owners' difficulty in insurance and the loss of insurance institutions can be alleviated
Text: Ding Yan, Yang Rui
Edited by Yuan Man
By June 1 at the latest, new energy vehicle insurance will reappear with new changes.
Recently, the State Administration of Financial Supervision and Administration issued the Notice on Promoting the High-quality Development of New Energy Vehicle Insurance (Consultation Draft) (hereinafter referred to as the "Draft") to property insurance companies and other relevant parties, which is expected to alleviate the problems of car owners in insurance and renewal in the future.
The adjustment of the independent pricing coefficient, which is one of the most important influencing factors in the premium pricing of new energy vehicle insurance, has aroused widespread heated discussions in the industry. The independent pricing coefficient is the discount coefficient of commercial insurance set by the insurance company within a certain range, and the independent pricing coefficient is an important factor in determining the price of auto insurance.
The Draft proposes that the range of independent pricing coefficients for new energy commercial auto insurance will be adjusted from the original "0.65-1.35" to "0.5-1.5", and the significance of the floating coefficient is to guide the improvement of driving habits and minimize the accident rate, etc., and adjusting the independent pricing coefficient of insurance is also a common practice for insurance products, especially in terms of auto insurance.
Guo Jinlong, a researcher at the Institute of Finance and Economics of the Chinese Academy of Social Sciences and director of the Insurance and Economic Development Research Center, analyzed that after the scope of floating is expanded, it will be more conducive to floating according to the risk situation, or formulating different prices and adjustment mechanisms according to the characteristics of different consumers. For insurance companies, the identification and pricing of risks can also be more accurate, which is conducive to the operation of new energy vehicle insurance.
According to an analysis from an auto company, this adjustment is more beneficial to car owners, high-quality customers are more money-saving, and the cost of risk customers is higher.
Chen Donghui, former president of Swiss Re China, believes that the draft has a number of highlights: first, it will further open up the floating rate and hand over the pricing power to the market, which is the way to cure the root cause; second, it emphasizes the pricing mechanism and the calculation mechanism of the industry's pure risk loss rate, and promotes the industry's cost control measures such as zero-to-whole ratio, which is to solve the problem through the mechanism and consider the long-term; and the third is to study and launch the "foundation + change" Combined insurance products provide more comprehensive insurance protection for new energy vehicles that operate online car-hailing on a part-time basis, and if the online car-hailing rate is in place, the premium of family self-use cars will steadily decline, and customer satisfaction will steadily increase.
Adjusting pricing, differentiating users, promoting industry cost control measures such as zero-to-whole ratio, and separating online car-hailing from separate pricing all point to solving the problem of loss in new energy vehicle insurance.
Under the dilemma of insurance and renewal, the core of the bailout is to solve the loss problem of new energy vehicle insurance and ensure sustainable operation.
From 2020 to 2024, the NEV industry has undergone significant changes, from relying mainly on the basic evaluation results of models and vehicles to determine premiums, to focusing on vehicle risk monitoring, to differentiating vehicle uses, etc., in depth and refinement.
With the continuous iterative changes of new energy vehicles, auto insurance is also constantly meeting new challenges. "In the new era of cars, the usage of cars and people is different, and the logic of car insurance insurance and claims is also different," said You Agile, a person in charge of car insurance who has worked in a number of property insurance companies.
1. New changes on the user side: price increase of up to 11%
Recently, Xiaomi's new SU7 has become the focus of market discussion as soon as it is launched. In addition to the appearance and performance of the product, the insurance price of this new car has also sparked discussions. It is understood that the current premium range for the first year of the car insurance is 6,000 yuan - 8,000 yuan, and the high-end version of the SU7 MAX includes compulsory traffic insurance, with a premium of more than 8,000 yuan, which is higher than that of fuel vehicles at the same price.
Xu Ning, the owner of a BYD car, has been complaining that the premium of the first year's car insurance is more than 5,000 yuan, and when the renewal time is approaching this year, he was told that the premium will increase to more than 7,000 yuan.
A number of provisions in the Draft Opinion are closely related to the price of new energy vehicle insurance, and one of them has attracted the most attention by expanding the range of independent pricing coefficients for new energy commercial vehicle insurance.
According to the "Explanation on the Calculation and Adjustment of the Benchmark Pure Risk Premium Table for Exclusive Products of New Energy Vehicle Commercial Insurance" issued by the Chinese Association of Actuaries at the end of December 2021, the rate adjustment coefficient of new energy vehicles is composed of the coefficient of preferential treatment without compensation, the coefficient of traffic violations, and the coefficient of independent pricing, among which the independent pricing coefficient is the most complex, and the insurance company will set different coefficients according to its own profit and loss and different vehicle risk status.
Chart: Marginal changes in the pricing of new energy vehicle insurance premiums, source: Insurance Association of China, Soochow Securities
What will be the impact of the adjustment of the pricing coefficient of new energy vehicle insurance on the price of new energy vehicle insurance?
A number of new energy vehicle insurance industry insiders believe that the premium of new energy vehicle insurance will increase in the future, with a maximum increase of 11%, and the possibility of price reduction is very small.
Zhang Lei, CEO of Cheche Technology, analyzed that by expanding the range of independent pricing coefficients, insurance companies will have greater independent pricing power and can conduct more refined insurance pricing according to the risk characteristics of car owners and vehicles. Theoretically, the adjustment of the insurance company's own pricing coefficient will allow low-risk vehicles to enjoy lower premiums, while high-risk vehicles may face higher premiums. In addition, the adjustment of the self-pricing coefficient can encourage car owners to improve their driving behavior, and a good driving record and low-risk characteristics can lead to lower premiums.
Dai Haiyan, managing director of risk information at LexisNexis, also said that the relaxation of self-pricing will have a limited impact on the average premium, but will increase the difference between high and low risks, so as to better ensure the implementation of the protection mechanism. By expanding the floating space of the independent pricing coefficient, the risks that insurers may not have dared to underwrite in the past may now be willing to underwrite due to the upside, so that more consumers are willing to insure.
According to a new energy vehicle source, this is also beneficial to car owners, before the new energy vehicle insurance pressure does not allow price increases, insurance companies are worried about losses and refuse to insure, now allow new energy vehicle insurance price increases, supply and demand contradiction to ease.
From the perspective of insurance companies, a person in charge of new energy vehicles of an insurance company said that the price of new energy vehicle insurance will likely rise in the future, especially in the non-business trucks and business trucks of some leading car companies.
However, according to a head auto repair software executive, everything has two sides, the current market on the new energy vehicle insurance homogenization phenomenon is more serious, if the new energy vehicle insurance terms can not be innovated, new energy vehicle insurance products can not be differentiated, then the main body of market competition can only fight a price war, the future may fall into a vicious circle of competition.
It is worth noting that the current new energy vehicle insurance for online car-hailing and family self-use cars is not operated separately, which has always been the main reason for the high premium of new energy vehicle insurance and the difficulty of applying for some operational online car-hailing commercial insurance.
The Draft Opinion stipulates that, in line with market demand, we will study and launch a "basic + change" combination insurance product to provide more comprehensive insurance protection for new energy vehicles that operate online car-hailing on a part-time basis, and optimize and adjust the benchmark rate of new energy commercial vehicle insurance.
Chen Donghui said that a very important aspect of the pricing mechanism of new energy vehicle insurance is that the premium and risk must be matched, and the terms and rates of the vehicles operated by online ride-hailing and the vehicles used by normal families must be different. Second, in the future, the rate should be gradually linked to the driving behavior, and the premium should be determined according to the degree of driving safety.
The Draft Opinion emphasizes that each regulatory bureau shall, according to the situation of the auto insurance market in its jurisdiction, properly determine the implementation time and retrospective regulatory standards for the expansion of the floating range of independent pricing coefficients for new energy commercial auto insurance in their jurisdictions, and file them with the State Administration of Financial Supervision (FSC), which in principle shall be implemented no later than June 1, 2024.
In addition, in order to protect the rights and interests of consumers, the Draft also requires the establishment of a new energy vehicle insurance protection mechanism, that is, to promote industry research and establish a high-risk vehicle insurance protection mechanism, effectively solve the problem of some vehicles difficult to insure, and realize the full insurance.
2. New changes on the institutional side: losses will narrow
Some research institutions believe that the current upper limit of 1.35 new energy commercial auto insurance pricing is one of the root causes of the problem of difficulty in insuring car owners and underwriting losses of property insurance companies.
According to the above-mentioned new energy vehicles, the adjustment of the independent pricing coefficient of new energy commercial vehicle insurance is beneficial to insurance companies, and future losses are expected to narrow. However, a person in charge of the new energy vehicle insurance operation of an insurance company said frankly that for insurance companies, not losing money may be just a good dream in the short term, and it depends on the competition strategy of each entity in the long run.
According to a set of industry data, the average loss ratio of new energy vehicle insurance was nearly 90% between March 1 and April 21, resulting in large underwriting loss pressure for insurance companies. Taking vehicle damage insurance as an example, the insurance rate of household vehicles, which accounts for the highest proportion of new energy vehicles, is as high as 31%, which is significantly higher than that of fuel vehicles (23%), and the average compensation amount is significantly higher than that of fuel vehicles.
According to the new energy vehicle insurance market analysis report released by China Insurance Information Technology Management Co., Ltd., compared with traditional automobiles, new energy vehicle insurance is characterized by high average comprehensive single premium and high insurance frequency. In particular, the average single premium of household new energy vehicles, which is most closely related to people's lives, is 28% higher than that of traditional cars, and the loss ratio is 5 percentage points higher.
The cost of maintenance is one of the factors that affect the price of new energy vehicle insurance. According to industry insiders, compared with traditional fuel vehicles, the price of new energy vehicle insurance is relatively high, and some car owners are indeed facing rising premiums this year. This is because the high insurance rate and maintenance costs of new energy vehicles have caused insurance companies to face losses in the new energy vehicle insurance business.
Taking the comprehensive ratio ratio, which is used by insurers to judge whether the property insurance business has reached the break-even point, as an example, 100% is to maintain breakeven, and above 100% means that it has underwritten operating losses. According to the exchange information of the industry, the comprehensive cost ratio of the new auto insurance policies in 2023 will basically exceed 100%, of which the new energy vehicle index is worse and the loss is greater.
According to the data disclosed by CPIC at the performance meeting, the insurance rate of new energy vehicles is as high as 30%, far exceeding the 19% of fuel vehicles, so that the cost of new energy vehicle insurance of CPIC property insurance exceeds 100%. However, Gu Yue, chairman of CPIC Property & Casualty, also said, "Although the comprehensive cost ratio of our new energy vehicle insurance is still in a state of loss, it has gradually shown a significant downward trend since last year, and we are full of expectations for the development of new energy vehicle insurance in the future, and it should be said that we have shown the dawn of hope." ”
Maintenance cost and insurance rate are the key factors affecting the comprehensive cost ratio of insurance companies, which in turn reflects the profit and loss of underwriting operations.
In order to alleviate the multiple problems existing in the current operation of new energy vehicle insurance, the Draft Opinion also clearly states that new energy commercial vehicle insurance products will be enriched to provide insurance protection for new energy vehicles operating online car-hailing on a part-time basis. Support the industry to optimize the protection liability of new energy commercial vehicle insurance, and increase product supply in an orderly manner. In line with market demand, we will study and launch a "basic + change" combination insurance product to provide more comprehensive insurance protection for new energy vehicles that operate online car-hailing on a part-time basis.
According to Zhang Lei's analysis, the main purpose of the "basic + change" combination insurance product is to meet the personalized insurance needs of different types of car owners. Based on factors such as the working hours and mileage of ride-hailing drivers, the corresponding premium calculation method is formulated to ensure that the premium can more accurately reflect the true level of risk.
In addition, in view of the high risk rate and high maintenance cost of new energy vehicle insurance, the "Opinion Draft" also gives directions, which require strengthening the professional research capabilities of new energy vehicles, supporting the industry to carry out research on the zero-integer ratio and safety index of new energy vehicles, and regularly releasing research results to the society, strengthening cross-industry exchanges and cooperation, providing suggestions and references for new energy vehicle manufacturers to optimize and improve product design, and promoting the reduction of new energy vehicle maintenance costs.
Li Ke, managing director and global partner at BCG, believes that the new energy vehicle market is still in a period of rapid development and rapid iteration of technology, both in terms of vehicle platform and electronic and electrical architecture, and is entering a process of rapid upgrade and iteration.
With the rapid iteration of new energy vehicles, auto insurance is also ushering in challenges. Yu Ze, Vice President of Chinese Insurance Group and President of PICC Property Insurance, said that with the rapid rise of new energy and intelligent networked vehicles, electrification, digital intelligence, networking and sharing have become new trends. Due to the interweaving of responsible entities and the complexity of risk types, the risk structure and risk cost of new vehicles are significantly different from those of traditional fuel vehicles, and the pricing basis, claims management, and sales model of auto insurance need to be rebuilt.
Zhang Lei believes that the future of new energy vehicle insurance must be "digital + intelligent", and the intelligent network of new energy vehicles is bringing revolutionary changes to product innovation in the insurance industry. With the rapid development of new energy vehicles, in the next step, about 80% of new energy vehicles will be equipped with intelligent assisted driving, then what will follow is intelligent assisted driving liability insurance, and the attributes of car insurance will also change, from car insurance to liability insurance, and the policyholder will also change from the owner to the car company.
In the future, car insurance will be divided into "real-time driving behavior + automotive software technology", and when switching to intelligent driving mode, the insurance liability will be transferred from the owner to the automaker or software company with autonomous driving technology. Auto insurance will be transformed from traditional property insurance products to "product liability insurance", and car companies will become the policyholders of liability insurance.
The above-mentioned "Draft Opinions" also clarifies that the level of digital intelligence in the operation of new energy vehicle insurance will be improved. Encourage the industry to actively use cutting-edge technologies such as big data analysis, blockchain, and cloud computing, accelerate the pace of digital, online, and intelligent transformation and upgrading, improve the risk identification and actuarial pricing capabilities of new energy vehicles, and reduce costs and increase efficiency through technological innovation and optimization of business processes.
At the same time, explore the innovation of risk reduction services for new energy vehicles. Encourage industry operators to take risk reduction management as the starting point and continue to improve the service system. We will better meet customer needs in terms of battery testing, charging pile services, advanced driver assistance system (ADAS) equipment installation, fleet management and safe driving services, and accelerate the improvement of the new energy vehicle insurance business ecosystem.
(Source of this article: Finance and Economics)