Insurance Industry Accelerates Entry into Smart Driving Era as New Energy Commercial Vehicle Insurance Premiums Surge 44% in Q1

As the penetration rate of new energy vehicles exceeds 40%, the market for new energy vehicle insurance is experiencing rapid growth. According to exclusive data obtained from industry sources, the premium for new energy commercial vehicle insurance in the first quarter of this year exceeded 31.4 billion yuan, marking a 44% increase compared to the same period last year. Additionally, the number of effective claims reported grew by 36.3%, which is lower than the premium growth rate, reflecting a trend of risk improvement driven by technological advancements.

With rapid iterations and upgrades in core technologies within China's new energy vehicle industry, the commercialization of intelligent driving technology is accelerating. Effectively mitigating the risks associated with intelligent driving through insurance has become a common demand from both automakers and vehicle owners. In this context, the property insurance industry is hastening its entry into the "smart driving era" and actively addressing the insurance gaps in this field.

In the first quarter, the new energy commercial vehicle insurance premium exceeded <b>31.4 billion yuan</b>. The surge in new energy vehicle sales continues to drive rapid growth in insurance premiums. Data shows that in the first quarter, the premium for new energy commercial vehicle insurance grew by <b>44%</b> compared to last year. Although this is lower than last year's growth rate of nearly <b>53%</b>, it significantly outpaces the overall growth rate of the insurance industry, which stands at <b>3.17%</b>.

According to Zhang Lei, founder and CEO of Cheche Technology, the first quarter is typically a slow season for the automotive market, yet new energy vehicle insurance has maintained a high growth rate, and he anticipates that the annual growth will exceed the first quarter figures. Wang Hao, founder and CEO of Copola Automotive Consulting Services, noted that the data indicates continued high growth in new energy vehicle sales, which in turn drives up insurance premiums. The China Association of Automobile Manufacturers reported that in the first quarter, <b>3.182 million</b> new energy vehicles were produced and <b>3.075 million</b> were sold, reflecting year-on-year increases of <b>50.4%</b> and <b>47.1%</b>, respectively. Moreover, the proportion of new energy vehicles within the total number of vehicles continues to expand, resulting in a higher growth rate for new energy vehicle insurance premiums compared to overall vehicle insurance growth. In the first quarter, new energy vehicle sales accounted for <b>41.2%</b> of total new vehicle sales, surpassing the <b>40.9%</b> market share projected for the entire year of 2024.

Regarding the development trends of new energy vehicle insurance, Yu Ze, Vice President of China People's Insurance Group and President of China People's Property Insurance Company (PICC), recently stated in response to a question that the government work report this year emphasizes the vigorous development of intelligent connected new energy vehicles, indicating a strong national policy support for the sector. He anticipates that new energy vehicle insurance premiums will continue to grow rapidly, with projections for <b>2025</b> indicating a similar trend. Zhujie, Deputy General Manager of China Taiping Insurance Group, also believes that new energy vehicle insurance will be a major source of growth in the future insurance market, predicting that by <b>2025</b>, premiums could reach <b>190 billion yuan</b>, maintaining a growth rate above <b>30%</b> and accounting for around <b>20%</b> of total vehicle insurance premiums.

In the case of PICC, its capacity and advantages in new energy vehicle insurance are continuously strengthening. In <b>2024</b>, it underwrote <b>11.5905 million</b> new energy vehicles, marking a year-on-year increase of <b>57.3%</b>, with this number accounting for <b>11%</b> of total underwriting. The premium income reached <b>50.857 billion yuan</b>, a year-on-year increase of <b>58.7%</b>, representing <b>17.2%</b> of total premiums.

Despite rapid premium growth, the high claims ratio and expensive premiums remain pain points for the industry's development. However, some positive changes are emerging. Data shows that in the first quarter, the number of effective claims for new energy commercial vehicle insurance increased by <b>36.3%</b>, while settled claims rose by <b>33.4%</b>, both of which are lower than the <b>44%</b> growth rate of premiums.

Zhang Lei believes that the slower growth of effective claims compared to the growth in underwriting and premiums suggests that the frequency of accidents may be declining, indicating an overall reduction in risk levels associated with new energy vehicles. Wang Hao points out that factors such as usage frequency and duration can impact the incidence of claims. Furthermore, as more vehicles are equipped with intelligent hardware or assistance systems, the likelihood of accidents may further diminish.

From the perspective of insurance companies, some firms have begun to reap the benefits of new energy vehicle insurance. Yu Ze reported that in <b>2024</b>, PICC achieved underwriting profitability for family-use new energy vehicles, and the comprehensive cost ratio for overall commercial insurance for new energy vehicles decreased by <b>5 percentage points</b> compared to <b>2023</b>. He added that in <b>2025</b>, assuming normal disaster levels and no significant policy changes, the company aims for growth in line with the market and a comprehensive cost ratio better than the previous year, targeting below <b>96%</b>, with the goal of keeping the comprehensive cost ratio for new energy vehicle insurance under <b>100%</b>.

Nonetheless, many small and medium-sized insurance companies still lack confidence in the profitability of new energy vehicle insurance. A claims manager from a small insurance firm indicated that achieving profitability in underwriting new energy vehicle insurance might take another five years. In <b>2022</b>, the insurance industry in China incurred losses of <b>5.7 billion yuan</b> from underwriting new energy vehicle insurance, with insurers covering <b>2,795</b> vehicle models, of which <b>137</b> had claims ratios exceeding <b>100%</b> (not accounting for operational management costs).

Recently, several new energy vehicle owners have shared that low operating costs are a significant advantage of their vehicles, but insurance premiums remain relatively high. One owner, Mr. Chen, mentioned that although he has not made any claims in the past three years, his insurance premium has increased compared to last year. He hopes that insurance companies will optimize product design and provide discounts for drivers with no claims history.

To better promote the development of new energy vehicle insurance in China, the National Financial Supervisory Administration and three other departments jointly released guidelines earlier this year to enhance regulation and support high-quality development in this sector. These guidelines include specific requirements for reasonably lowering the maintenance and usage costs of new energy vehicles, innovating insurance offerings, improving management levels, and strengthening oversight.

Following these guidelines, the insurance industry is taking proactive measures. For instance, a platform called "Good Insurance for High-Risk New Energy Vehicles" was launched on January 25, establishing a risk-sharing mechanism that provided insurance coverage of <b>94.49 billion yuan</b> for over <b>110,000</b> new energy vehicles in its first month.

Wang Hao noted that more insurance companies are actively underwriting new energy vehicle insurance. Additionally, companies in the insurance technology sector and automotive repair and parts industries are increasing collaboration to help reduce costs. Zhang Lei emphasized that expanding the supply channels and types of repair parts, guiding consumers to develop good driving habits, and promoting compliance with data sharing across industries would help lower maintenance costs for new energy vehicles, thereby supporting more reasonable premiums.

Amidst the rapid growth of new energy vehicle insurance premiums and a slight easing of underwriting risks, there is a growing focus on intelligent driving insurance. Insurance companies and automakers are actively engaging in this area. The guidelines emphasize the importance of adapting to the trend of intelligent driving and call for a comprehensive study of its long-term impacts on vehicle insurance operations, encouraging proactive transformation.

From the perspective of the property insurance industry, leading companies are making significant strides. Chen Hui, General Manager of China Pacific Property Insurance, mentioned that there is still considerable market demand for intelligent driving products and coverage in the new energy vehicle sector. The company has established application laboratories with several automakers and plans to further enhance its talent pool.

According to China's standards for automobile driving automation, intelligent driving is categorized into six levels from L0 to L5, each corresponding to different degrees of automation and functionality. Yu Ze stated that PICC is developing specialized insurance products for L3 level and above intelligent connected vehicles, preparing for the new insurance risks and demands arising from advancements in intelligent driving technology. Additionally, PICC is collaborating with relevant departments to establish industry standards for determining liability in traffic accidents involving intelligent connected vehicles.

Some automakers are also attempting to collaborate with insurance companies to promote the implementation of intelligent driving insurance. For instance, in early March, Xiaomi Automotive announced plans to launch the "Xiaomi Intelligent Driving Protection Service" in partnership with leading insurance institutions, aiming to offer coverage amounts up to <b>3 million yuan</b>.

Managing risks associated with intelligent driving presents higher demands on insurance companies. Lin Juan, Assistant General Manager of the Non-Motor Insurance Department at China Life Property Insurance in Zhejiang Province, noted that the widespread adoption of intelligent driving technology introduces uncertainties into traditional actuarial models and risk pricing, necessitating enhanced risk management practices to remain competitive.

Wang Hao believes that to reduce the accident rate of new energy vehicles, it is essential to unite forces from automakers, driving schools, and insurance companies to help drivers understand intelligent driving, adapt to the characteristics of new energy vehicle technology, and promote safe driving to mitigate subjective risks.

Several interviewees expressed that under the dual drivers of regulatory norms and technological innovation, the new energy vehicle insurance market is facing a historic opportunity for premium scale growth while also carrying the responsibility of establishing a new risk-sharing mechanism. In this industrial revolution driven by electrification and intelligence, the insurance industry is poised to contribute significantly.