isildurpoker| Perspective on the multiple dilemmas of the new energy vehicle insurance market and urgently need to seek solutions to break through

The main creator of this articleIsildurpokerFu Minghui, Research Center for Financial reputation of Internet Intelligence Tianyuan

New energy vehicle insurance refers to the risk protection for new energy vehicles, including vehicle loss insurance, third party liability insurance, personnel liability insurance and so on. Compared with the traditional fuel vehicle insurance, about 50% of the overall cost of new energy vehicles comes from the "three electricity systems", that is, batteries, motors and electronic controls, and their overall components and technologies are more complex than those of traditional fuel vehicles, resulting in high repair and maintenance costs, and there will be more accident risk points different from traditional fuel vehicles. According to the New Energy vehicle Insurance Market Analysis report released by CBIT, the average premium of new energy vehicles is actually about 21% higher than that of fuel vehicles. At present, the owners of new energy vehicles complain more and more frequently about the high cost of car insurance, the difficulty of insurance, the difficulty of renewal and the difficulty of settling claims. However, in addition to consumers, insurance companies are also "complaining". At present, among the insurance companies that arrange the car insurance business, only the medium and large insurance companies with the head achieve profits, and most of the rest are in a state of lossmaking, especially the new energy car insurance business is generally in a state of loss. According to the data released by the property insurance company, the comprehensive cost rate of fuel vehicles is about 96%, while the comprehensive cost rate of new energy vehicle insurance is about 120%, the Bank of China Insurance News reported. (note: for insurance companies, the comprehensive cost rate, including compensation rate and expense rate, is the main standard to measure the profitability of the property insurance industry. The lower the comprehensive cost rate is, the stronger the profitability of the property insurance company is; when the comprehensive cost rate is 100%, it means equal income and expenditure, no underwriting profit and no underwriting loss. )

At present, China's new energy vehicle insurance market is at the critical point of "breaking the situation". With the issuance of the notice on promoting the High-quality Development of New Energy vehicle Insurance (draft for soliciting opinions), it may be expected to provide the direction for the new energy vehicle insurance to "break the situation". It is reported that, in principle, the new rules will be implemented no later than June 1, 2024. Before the formal landing of the new regulations, this paper will discuss the problems existing in the current new energy vehicle insurance market, and observe the related risks faced by insurance companies in this field through typical cases.

I. multiple dilemmas in the field of new energy vehicle insurance

Under the background of the rapid development of new energy vehicles, the new energy vehicle insurance market is also expanding rapidly. However, this emerging field is facing multiple difficulties, affecting the operation of insurance companies and the experience of consumers. Many problems in the new energy vehicle insurance industry are mainly reflected in the fact that the premium income is not proportional to the income of the insurance companies, the high frequency of coming out of the insurance and the high reparations in each case lead to the underwriting operating losses of the insurance companies. as well as the problems of fast iteration of new energy vehicles and "data isolated island" lead to the lack of risk cost control ability of insurance companies. These problems not only reflectIsildurpokerIt not only reveals the immaturity of the new energy car insurance market, but also reveals that it needs to be improved at the policy and technical level.

(1) it is difficult to cover high premiums and insurance companies are facing the pressure of underwriting losses.

Data show that the average premium of new energy vehicle insurance in 2023 is about 4000 yuan, while the average premium of commercial insurance of traditional models is about 2200 yuan, the former is about twice that of the latter. Soochow Securities predicts that the premium scale of new energy car insurance will reach 186.5 billion yuan in 2025, accounting for about 17% of the total car insurance premium.Isildurpoker.9%; in 2030, the premium will reach 454.1 billion yuan, accounting for about 32% of the total car insurance premium.Isildurpoker.1%. Although this is a huge new energy car insurance "blue ocean" market, the other side of the premium surge is the high risk rate and high compensation rate, resulting in insurance companies facing greater pressure of underwriting losses. The new energy car insurance market is caught in a dilemma of "car owners say expensive, insurance companies call losses".

According to the data disclosed by listed insurance companies, the comprehensive vehicle insurance cost rate of more than 2023 property insurance companies has increased. The comprehensive cost rates of PICC property insurance, Ping an property insurance and PICC property insurance were 96.9%, 97.7% and 97.6% respectively, an increase of 1.3%, 1.1% and 1.1% respectively over the previous year. Industry insiders believe that this phenomenon is related to the risk rate of new energy vehicles is higher than that of fuel vehicles. In addition, the risk factors to be considered in the pricing of new energy vehicle insurance are more than those of fuel vehicles, resulting in higher premiums than fuel vehicles at the same price. However, due to the constraint of the independent pricing coefficient, even if some car insurance prices reach the "limit high price", the insurance company may still lose money.

(2) the frequency of getting out of danger and the high average indemnity per case are the common characteristics of new energy vehicle insurance.

According to the article "the Reform of property Insurance Management Mode from the Perspective of New Energy" by China Bancassurance Media, the high frequency and average reparations of new energy vehicles lead to their compensation rate significantly higher than that of traditional fuel vehicles. The data show that the overall loss insurance compensation rate of new energy vehicles is higher than that of fuel vehicles. In terms of non-business trucks, although the reparations of new energy vehicles are slightly lower than those of fuel vehicles, their risk rate is twice that of fuel vehicles, resulting in a compensation margin gap of about 7%. The core problem of the unprofit of new energy vehicle insurance is that the compensation rate is too high, and the high compensation rate mainly comes from the high risk rate. The reasons for the high accident rate (accident frequency) include not only the safety problems of the "three electricity" system, but also the instability of the automobile intelligent system and the driving behavior problems of users. In addition, the operating vehicles of new energy vehicles account for a relatively high proportion, and the cost of new energy vehicles is lower than that of traditional fuel vehicles. According to statistics, 21% of new energy vehicles are used for rental, which is much higher than 1% of traditional fuel vehicles; the average daily driving time and mileage of operating vehicles are higher, and the uncertainty of road conditions leads to a higher risk rate. In addition to the above factors, the maintenance cost of new energy vehicles is also high. This is related to the intensive application of new technologies (such as intelligent cockpit and intelligent driving), immature parts supply chain, opaque maintenance programs and so on.

(3) the fast iteration of new energy vehicles and the problem of "data isolated island" lead to the lack of risk cost control ability of insurance companies.

Compared with fuel-fueled vehicles, the purchase cycle of new energy vehicles is shorter. According to the incomplete statistics of "late LatePost", the number of new energy models scheduled to be listed in 2024 in the domestic market has reached 106, and new products will appear on the market every month. Each iteration of the new energy vehicle can bring a significant improvement in performance or experience, and become a high-profile "electronic FMCG". However, for insurance companies, due to the rapid iteration of new energy vehicles and the existence of the problem of "data isolated island", it is difficult to form a data sharing mechanism in the industry, and it is even more difficult to get through the data sharing among car companies, insurance companies and third-party data platforms. At the same time, the insurance company has a short time to carry out new energy vehicle insurance business, less data and fast technical iteration, so it is difficult to accumulate effective data. This leads to the lack of strong data support for insurance companies in pricing, which significantly increases the difficulty for property insurance companies to accurately estimate the cost of risk. Therefore, on the premise of ensuring the interests of the company, insurance companies will increase the pricing of car insurance as much as possible on the independent pricing coefficient, which is also one of the reasons why new energy vehicle owners face "high premium" when they apply for insurance.

In order to solve these problems, a number of insurance companies, such as PICC property Insurance, Ping an property Insurance and Pacific property Insurance, have cooperated with Ant Insurance, an Internet insurance agency platform, to develop "joint pricing" technology for car insurance, which was officially launched on May 9. By breaking through the data barrier, this technology can achieve more accurate car insurance pricing from the two dimensions of "car" and "person".

II. Typical case analysis

The above problems in the new energy car insurance industry have been reflected in specific public opinion events for a long time. As early as April 2021, Tesla was refused insurance by insurance companies in some areas because of the high cost of vehicle repairs, which triggered public controversy over new energy vehicle insurance and called for the introduction of exclusive commercial insurance provisions for new energy vehicles. Despite the release of the follow-up provisions, the problems in the field of new energy vehicle insurance still exist, premium pricing and renewal issues continue to be criticized by consumers, and the relevant public opinion continues. Recently, Xiaomi Group released its first new energy vehicle, SU7. The premium of its high-end version of SU7 MAX (including compulsory insurance) exceeds 8000 yuan, while the first-year premium of Maserati's new car (fuel car), which costs 680000 yuan, is about 6000 yuan. This matter once again set off a heated discussion of public opinion, promoting the call for reform in the field of new energy vehicle insurance.

(1) Tesla's refusal of insurance was exposed.

On April 21, 2021, media reported that "Ping an Automobile Insurance refused to cover Tesla's new car owners in Henan, Zhejiang, Shaanxi, Beijing and Shanghai, and tightened the renewal policy for already insured car owners." In this regard, Ping an property Insurance quickly denied that the company did not "suspend new insurance for Tesla car owners in some provinces and cities". Tesla also responded that the two sides "cooperate normally in terms of car insurance business nationwide". Although insurance companies and car companies subsequently refuted the rumor, but after the incident fermented, it triggered public opinion's attention and discussion on new energy vehicle insurance. Although Tesla and Ping an Insurance deny the underwriting changes, an intermediary who studies Tesla car insurance said Ping an property Insurance did tighten Tesla's car insurance business in some places, Caixin reported. The intermediary said that due to the high price of Tesla accessories and low market share, most insurance companies do not make a profit or even lose money in this business. Although mainstream insurance companies later signed a cooperation agreement with Tesla, Tesla's sales staff gave priority to recommending these companies' car insurance, but it was not fully open in every region.

According to the analysis, the incident in which Tesla was exposed to refuse insurance aroused widespread public concern. compared with questioning the insurance companies involved, it highlights more of the contradiction between market promotion and risk control of new energy car insurance at this time. it also highlights that the development of domestic new energy car insurance is still in the early exploratory stage. The focus of the industry at this time is how to separate new energy vehicles from traditional fuel vehicles and hybrid vehicles, and conduct accurate risk assessment through new energy exclusive information such as batteries, motors, etc., in order to develop exclusive insurance for pure electric vehicles. To a certain extent, it promotes the release of exclusive insurance provisions for new energy vehicles and promotes the industry to accelerate the exploration of insurance products and services that are more suitable for new energy vehicles.

(2) accelerated layout of insurance by automobile companies

On May 9, 2023, the Banco Insurance Regulatory Commission issued a reply for the change of shareholders of Yi'an property Insurance Co., Ltd., agreeing that BYD Automotive Industry Co., Ltd. should transfer 1 billion shares of Yi'an property Insurance, with a shareholding ratio of 100%. "Yi'an property Insurance Co., Ltd." was changed to "Shenzhen BYD property Insurance Co., Ltd.". It is reported that BYD bought Yi'an with a 100% stake, making it the first insurance company in China to be 100% controlled by a car company. In addition to BYD, the car companies that have laid out new energy car insurance business are Weilai, Tesla, Xiaopeng Automobile, ideal Automobile and Xiaomi Automobile. In July 2018, Xiaopeng Automobile established Guangzhou Xiaopeng Automobile Insurance Agency Co., Ltd.; in 2020, Tesla Insurance Brokerage Company was established in Shanghai and completed its cancellation in April this year; in January 2022, Weilai Insurance Brokerage Co., Ltd. was established; in June 2022, ideal Automobile acquired Yinjian Insurance Brokerage Co., Ltd. through its wholly-owned subsidiary Automobile Hejia Financial Technology (Jiangsu) and obtained the insurance broker license. After launching its first new energy vehicle, Xiaomi SU7, in March 2024, Xiaomi announced that its Houji insurance broker had reached a cooperation with Automotive Technology to provide car insurance service solutions for car owners in Beijing, Shenzhen, Hangzhou and other cities across the country.

The analysis shows that, for car owners, the high price of new energy car insurance, the difficulty of renewal and other problems always exist. Self-built insurance companies of new energy car companies may be a solution, which is expected to subvert the traditional car insurance pricing and sales model, reduce their own car insurance premiums, so as to enhance brand competitiveness. However, it is not easy for car companies to lay out insurance: Geely's management changes frequently, losing nearly 100 million yuan in 2022; Zhongcheng Insurance, in which GAC GROUP is a shareholder, did not make a profit until eight years ago, but lost nearly 200 million yuan on car insurance last year. Tesla's insurance business in the United States earned a cumulative premium of US $300m by the end of 2022 and a net underwriting loss of US $13 million in the first nine months of 2023, with a combined cost rate of 146 per cent, and his insurance brokerage company in China has been cancelled. On the other hand, the entry of automobile enterprises into the insurance industry poses a certain competitive pressure on the traditional insurance enterprises. For example, the independent pricing coefficient for Tesla by insurance companies is about 1.2,1.25,1.1and 1.15,1.3-1.35 for Xiaopeng in many areas. BYD Qin has more uses for online car-hailing, with a coefficient of 1.35, which is the top case of the independent pricing coefficient. After the independent pricing coefficient widened to 1.5, the premium of models such as BYD Qin may continue to rise. However, according to the first policy issued by BYD property Insurance, the premium is 3900 yuan, of which commercial insurance is 2950 yuan, compulsory insurance is 950 yuan, and the model involved is the 2024 dolphin honor version 420km free version (guidance price 112800 yuan). According to media reports, the price of BYD car insurance will fluctuate according to the owner information collected in the background, and car owners who drive cautiously and with safe driving data will enjoy a lower premium. In this regard, in terms of premium price, the layout insurance of automobile enterprises will cause the risk of user loss of traditional insurance enterprises.

In a short time, the layout insurance of automobile enterprises is not the optimal solution of new energy vehicle insurance. Although car companies have data advantages, they are still "amateurs" in the insurance industry. A better way is to achieve the sharing of resources among car companies, big data monitoring platform and insurance enterprises, and form an ecological closed loop. This can not only give full play to their respective advantages, but also improve the quality of service and customer experience, and achieve win-win results.

(3) dispute over the premium of Xiaomi SU7

On March 28th, 2024, Xiaomi Group officially launched the first Xiaomi new energy vehicle, SU7, which has been developed for three years, and has once again become the focus of public attention. The listing of Xiaomi SU7 has aroused heated discussion in various related industries, and its supporting insurance products and services have also attracted market attention. On social platforms, some SU7 owners have posted insurance plans. It is reported that the basic version includes compulsory insurance, commercial insurance and driving accident insurance, the premium is about 6638 yuan, and the premium version is about 7036 yuan. The main reason for the price difference between the two is the insurance amount of third party liability insurance and other items. Many netizens said that compared with expectations, the premium of Xiaomi car is more close to the people, and even lower than the premium of some low-cost new fuel vehicles. In addition, there are also screenshots of Xiaomi car insurance posted by car owners. The picture shows that the high-end version of SU7 MAX counts as compulsory insurance, with a premium of more than 8000 yuan, including commercial insurance of more than 6700 yuan. In this regard, some netizens said that this insurance premium is not cheap, almost close to the insurance premium of more than 500,000 oil vehicles. According to the salesperson, the price of Xiaomi auto insurance in the first year is 6000-8000 yuan. At the same time, like traditional fuel cars, if the insurance is not out of danger, the renewal price will gradually fall. Netizens have different comments on this: some people say that the premium is not expensive and lower than expected, while others complain that new energy car insurance is generally too expensive, and all the fuel savings are covered by insurance.

Analysts believe that the millet SU7 premium dispute reflects the rapid development of the new energy car insurance market while facing many challenges, of which the most sensitive to consumers is the "insurance price". With the continuous improvement of the penetration and ownership of new energy vehicles and the promotion of favorable policies, the market attention and discussion on new energy vehicle insurance is expected to continue to rise. This incident has also rekindled the long-term discussion on new energy vehicle insurance. Insurance companies should take this as an opportunity to gain an in-depth understanding of market demand and optimize products and services. At the same time, insurance companies should clarify the relevant insurance terms and clearly explain the composition of premiums to consumers so as to avoid misunderstandings among consumers.

III. The Development of New Energy vehicle Insurance Policy

In September 2020, the Bancassurance Regulatory Commission issued the guidance on the implementation of Comprehensive vehicle Insurance Reform, supporting the industry in formulating new energy vehicle insurance, accident insurance for drivers, and motor vehicle extended warranty insurance model provisions, and exploring innovative products such as motor vehicle mileage insurance (UBI) in new energy vehicles and qualified traditional vehicles.

On December 14, 2021, the China Insurance Industry Association issued the exclusive clause of commercial insurance for new energy vehicles (trial) (hereinafter referred to as the "model clause"). At the same time, the Chinese Association of Actuaries also issued the benchmark pure risk premium table (trial) of commercial insurance for new energy vehicles to its member units (hereinafter referred to as the "rate table"). The so-called "model clause" is the industry model for insurance companies when developing commercial car insurance clauses, and each company can optimize the minimum standards of the "model clause" according to their own conditions; and the "rate table" is the basis for the development and pricing of new energy automobile insurance products in the industry. The "model clause" clearly brings the "three electricity" system into the scope of insurance protection, and formulates its own additional provisions to form an independent pricing system for new energy vehicles.

In April 2024, the State Financial Regulatory Administration issued the Circular on promoting the High-quality Development of New Energy vehicle Insurance (draft for soliciting opinions), which broadened the independent pricing coefficient of insurance companies from [0.65: 1.35] to [0.5: 1.5], further improving the pricing power of market operators. In addition to proposing to expand the independent pricing coefficient, the regulation also supports strengthening professional research on new energy vehicles and encourages the industry to use cutting-edge technologies such as big data analysis, blockchain and cloud computing to speed up the transformation and upgrading of digitalization, online and intelligent, and improve the risk identification and actuarial pricing ability of new energy vehicles. At the same time, the regulation also encourages industry operators to take risk reduction management as a starting point to continuously improve the service system, such as battery testing, charging pile services, advanced driving assistance system (ADAS) equipment installation, fleet hosting and safe driving services to better meet customer needs, and speed up the improvement of new energy vehicle insurance business ecology.

IV. A brief Analysis of the measures to break through the encirclement

(1) to realize the docking of risk models with automobile enterprises and break the status quo of "data isolated island"

With the continuous development of new energy vehicle market, insurance companies need to take the initiative to intervene and cooperate with new energy vehicle companies to achieve complementary advantages. The first task is to improve the ability of accurate pricing based on risk data. Insurance companies are good at risk pricing, especially in understanding the risk factors of "people", while car companies are good at collecting "car" data and controlling claims costs. In the future, auto insurance will change from sales-driven to data-driven, so it is very important to strengthen the data connection and analysis and processing ability of the industry. It is understood that the Shanghai Insurance Exchange has launched a model exploration at the data level, through cooperation with new energy data centers and insurance companies, the dynamic vehicle networking data of new energy vehicles and the insurance company's vehicle insurance claim data are modeled and analyzed on the closed data platform of the Insurance Exchange, and a household vehicle exclusive insurance risk scoring product based on new energy vehicle dynamic data is developed.

(2) learn from overseas cutting-edge experience and adjust user premiums in a more flexible manner

The problem of high premium pricing of new energy vehicles also exists overseas, and mainstream car insurance companies in the US market also face similar challenges, resulting in a substantial increase in vehicle costs for new energy vehicle owners, which in turn affects Tesla's actual sales. In order to solve this problem, Tesla actively entered the insurance market and launched a self-operated insurance product-Tesla Insurance. The insurance uses the driving behavior data of car owners for risk screening and pricing, and adopts a dynamically adjusted premium quotation model based on the safety score performance in the past 30 days, which is more flexible and risk-controllable than the one-year pricing model of traditional car insurance. Tesla insurance has been launched in 12 states in the United States, and has made steady progress in scale expansion.

China's insurance companies can learn from the experience of Tesla insurance, on the basis of realizing the docking of the risk model and automobile enterprises, and based on the user driving behavior data, adopt a more flexible way to adjust the premium and related compensation. This premium adjustment model based on dynamic safety score is expected to bring more innovative and adaptable solutions to China's new energy vehicle insurance market.

(3) subdivide the nature of the use of new energy vehicles to achieve accurate and differentiated pricing

Under normal circumstances, the higher the risk, the higher the premium. However, at present, it is difficult for insurance companies to accurately distinguish the actual use of the vehicle. There are some vehicles that are insured as family-owned vehicles but actually engage in online ride-hailing business. Their risk characteristics are similar to those of family-owned vehicles. Significant difference. Because insurance companies cannot accurately identify them, on the one hand, it is difficult to price scientifically and accurately. On the other hand, sometimes it may even cause "accidental injury" and "refuse insurance" on the grounds of "risk of opening online ride-hailing". In this regard, insurance companies urgently need to improve the identification and management of the nature of vehicle use to achieve differentiated treatment and accurate pricing. This also requires insurance companies to cooperate with third-party data platforms such as car companies and online ride-hailing platforms to achieve data "sharing".