Financial Services Association, April 19 (Reporter Xia Shuyuan) As the world's largest consumer of new energy vehicles, China's more than 20 million NEV owners have ushered in great benefits.

According to a Financial Services Association reporter, in order to promote the cost reduction and efficiency of NEV insurance, the State Financial Supervisory Authority recently issued the “Notice Concerning the Work Related to Promoting the High-Quality Development of NEV Insurance (Draft for Comments)” (hereinafter referred to as the “Draft for Comments”).

Specifically, the “Draft for Solicitation of Comments” mainly includes the following: the independent pricing coefficient range for new energy commercial vehicle insurance is implemented according to [0.5-1.5]; in order to emphasize the role of pure risk premiums in the pricing of new energy vehicle insurance, dynamic optimization and adjustment of the benchmark rate is required; in order to solve the problems of applying for new energy vehicles, especially vehicles used for business purposes such as online car-hailing, etc., the “Draft for Solicitation of Comments” requires insurance companies to study and launch “basic+change” insurance products in line with market needs.

Industry insiders said that the “Draft for Solicitation of Comments” will push for lower premiums for household NEV insurance, increase premiums for operating NEV insurance, improve overall NEV insurance profits, and solve the problem of insurance companies' low willingness to insure high-risk vehicles.

It is proposed to optimize and adjust the benchmark rate for NEV insurance, and the autonomous pricing coefficient range is in line with fuel vehicles

In the context of the continuous development of the NEV market and industry, NEV insurance, as an important supporting product to protect users' rights and interests, plays an important role in dispelling consumers' purchasing concerns and promoting the popularization of NEVs.

According to reports, in order to optimize the NEV insurance supply mechanism, this “Draft for Solicitation of Comments” proposes four aspects:

The first is to expand the scope of independent pricing factors for new energy commercial vehicle insurance. In order to improve the pricing capacity of market operators, the “Draft for Solicitation of Comments” proposes that the range of independent pricing factors for NEV commercial vehicle insurance be implemented in accordance with [0.5-1.5].

According to reports, in order to enhance the pricing autonomy of property insurance companies, the former Banking Insurance Regulatory Commission expanded the range of independent pricing coefficient fluctuations for commercial vehicle insurance from [0.65-1.35] to [0.5-1.5] as early as 2023. As can be seen, the range of independent pricing factors for new energy commercial vehicle insurance is already on par with fuel vehicles.

Mao Qingqing, head of insurance technology industry research in the CICC Research Department, said that previously, due to limited independent pricing coefficients, insurance companies were unable to provide premiums equivalent to risk for many new energy vehicles used in online car-hailing businesses. Relaxation of the autonomous pricing coefficient will reduce premiums for domestic NEVs and raise premiums for operating vehicles.

The second is to diversify new energy commercial vehicle insurance products. In order to support the industry in optimizing NEV commercial vehicle insurance coverage and increasing product supply in an orderly manner, the “Draft for Solicitation of Comments” requires insurance companies to meet market needs, research and launch “basic+variable” combined insurance products to provide more comprehensive insurance coverage for new energy vehicles that operate online car-hailing on a part-time basis.

According to Mao Qingqing, the intention is to clearly cover new energy online car-hailing, research and launch a “basic+change” combined insurance product to solve the problem of applying for insurance, or improve the pricing accuracy of part-time online car-hailing premiums through the product portfolio.

The third is to optimize and adjust the benchmark rate for new energy commercial vehicle insurance. In order to give full play to the benchmark role of industry pure risk premiums in pricing, improve the normalized mechanism for the calculation and adjustment of industry pure risk premiums. The “Draft for Solicitation of Comments” supports regular calculation and timely adjustment of pure risk premiums in the NEV commercial vehicle insurance industry based on the actual risk situation in the market, optimizing pricing standards for new models, and improving pricing accuracy.

Mao Qingqing said, “Previously, the entire NEV insurance industry underwrote losses due to problems such as operating vehicles accounting for too high share and insufficient premium adequacy due to factors such as the insurance rate being much higher than fuel vehicles. This measure helped improve this situation.”

Fourth, establish an underwriting guarantee mechanism for NEV insurance. In order to effectively solve the problem of some vehicle insurance difficulties and achieve full coverage, the “Draft for Solicitation of Comments” will push the industry to research and establish a back-up guarantee mechanism for high-risk vehicles. According to reports, the Insurance Exchange is discussing plans with regulators, studying and setting up industry mechanisms to provide underwriting guarantees for high-risk new energy vehicles, thereby improving insurance companies' willingness to underwrite.

Encourage exploration of innovation in risk reduction services and raise the level of digital intelligence in NEV vehicle insurance operations

In order to improve the operating level of NEV insurance in the insurance industry, the “Draft for Solicitation of Comments” encourages industry operators to explore innovative NEV risk reduction services, strengthen NEV professional research capabilities, and raise the level of NEV business intelligence.

Specifically, the “Draft for Solicitation of Comments” supports the industry to carry out research on zero comparison of new energy vehicles, safety indices, etc., and regularly release research results to the public. Strengthen cross-industry exchanges and cooperation, provide suggestions and references for NEV manufacturers to optimize and improve product design, and promote the reduction of NEV maintenance costs.

In terms of improving the level of digital intelligence in NEV insurance operations, the “Draft for Solicitation of Comments” encourages the industry to actively use cutting-edge technologies such as big data analysis, blockchain, and cloud computing to accelerate the pace of digital, online, and intelligent transformation and upgrading, improve risk identification and actuarial pricing capabilities for NEVs, and achieve cost reduction and efficiency through technological innovation and optimization of business processes.

In addition, the “Draft for Solicitation of Comments” also encourages industry operators to use risk reduction management as an entry point to continuously improve service systems.

For example, we can better meet customer needs in terms of battery testing, charging pile services, advanced driver assistance system (ADAS) equipment installation, fleet hosting and safe driving services, etc., and accelerate the development of a new energy vehicle insurance business ecosystem.

According to Zhang Lei, founder and CEO of Checha Technology, the auto insurance industry chain is undergoing reshaping and transformation along with the development trend of intelligent and electrified vehicles. By building a full-process digital service platform, NEV companies have digitized all of their services, including car booking, delivery, financial services, charging, and membership. As an important part of this, insurance is naturally embedded in the car companies' digital systems to provide users with convenient and quick insurance, renewal, and claims services.

It will be implemented no later than June 1. Financial insurance companies should reasonably set the average value of the independent pricing coefficient and the upper limit of the processing fee rate

In order to promote the implementation of various key tasks in an integrated manner, the “Draft for Solicitation of Comments” clarifies the timing of policy implementation and the responsibilities of all parties.

In terms of the implementation period of the policy, the “Draft for Solicitation of Comments” clearly states that each supervisory authority should properly determine the implementation time and retroactive supervision standards for expanding the scope of autonomous pricing coefficient fluctuations for new energy commercial vehicle insurance within its jurisdiction, and file a record with the General Administration of Financial Supervision. In principle, the implementation period is no later than June 1, 2024.

At the same time, the “Draft for Solicitation of Comments” requires all supervisory authorities to play a guiding role and guide property insurance companies to reasonably set the average independent pricing coefficient and handling rate limits for new energy commercial vehicle insurance in each region.

All property insurance companies should strictly implement the various regulatory requirements for NEV insurance, optimize the supply of NEV insurance, meet consumer protection needs, continuously improve the service system, and enhance NEV vehicle insurance consumers' sense of acquisition.

The Insurance Industry Association should formulate and publish model clauses for “basic+change” combined insurance products for new energy vehicles, study and formulate implementation rules on underwriting guarantees for high-risk new energy vehicles, and organize and carry out research on zero comparison and safety indices for new energy vehicles.

The Association of Actuaries should further improve the normalization mechanism for estimating pure risk premiums for NEV commercial vehicle insurance, and scientifically calculate and publish pure risk premiums for NEV commercial vehicle insurance in a timely manner based on changes in market risk.

Bank Insurance Credit Company should continue to upgrade its car insurance information platform, provide data and system support to the financial insurance industry, and do a good job of monitoring and early warning of new energy vehicle insurance rates.

The Shanghai Insurance Exchange will continue to build and improve the NEV insurance transaction service system to provide supporting system support for the implementation of NEV underwriting guarantees. Bank Insurance Credit Company and Shanghai Insurance Exchange will collaborate with relevant units to establish a cross-industry data sharing mechanism for new energy vehicles.