Rising Insurance Costs for Electric Vehicles: Navigating the New Pricing Landscape and Coverage Strategies

As of the end of 2024, the number of new energy vehicles (NEVs) in the country has reached 31.4 million. While these vehicles enter households with promises of “energy savings and intelligence,” the costs associated with their insurance have become a new focus for car owners. Notably, the insurance premium for a 200,000 yuan NEV is now comparable to that of a 500,000 yuan gasoline vehicle, and some owners who have not filed any claims are still facing premium increases. This trend signifies a complete restructuring of the pricing logic in NEV insurance.

On May 20, Yuan Lei, head of NEV insurance at Zhong An Insurance, discussed the intricacies of pricing during the “520 Wealth Festival” hosted by Daily Economic News. He emphasized that the core of NEV insurance pricing is not the vehicle price itself, but rather the dynamic balance of risk costs.

In the conversation, Yuan delved deep into key topics such as the pricing logic driven by claims ratios and the intelligent upgrade of the claims process. He also addressed concerns from car owners regarding minor damage reporting strategies and tips for avoiding pitfalls in online insurance purchases, offering professional and practical solutions.

Premium Discrepancies: Why Are NEV Insurance Rates Rising?

Recently, an interesting phenomenon has emerged in the market: the insurance premium for a 200,000 yuan NEV is surprisingly on par with that of a 500,000 yuan gasoline vehicle. What lies behind this inverted premium structure?

According to Yuan, in traditional gasoline vehicle insurance logic, the purchase price of a vehicle is typically positively correlated with its premium. For instance, insuring a 200,000 yuan gasoline vehicle with damage coverage, 2 million yuan third-party liability, and driver accident insurance usually results in an annual premium of about 3,000 to 5,000 yuan. Conversely, the premium for a 500,000 yuan gasoline vehicle can reach 6,000 to 7,000 yuan.

Currently, however, the market shows a significant divergence: the annual premium for a 200,000 yuan NEV generally ranges from 6,000 to 7,000 yuan or even higher, leading to the phenomenon of “inverted premiums.” Consumers are left with the impression that while purchasing the vehicle saves money, insuring it costs more.

The core reason for this discrepancy lies in the underlying logic of insurance company pricing mechanisms. The primary basis for car insurance pricing is the claims ratio (the ratio of claims costs to premiums), which is positively correlated with premiums. The claims ratio is determined by the average claims amount and the frequency of claims. Statistics indicate that both the frequency and average claims amount for NEVs are significantly higher than those for gasoline vehicles, with differences manifesting in three main areas:

• Speed of Technological Iteration: The technological iteration cycle for NEVs is just one year (compared to 4 to 6 years for gasoline vehicles). For example, millimeter-wave radar may be upgraded to laser radar the following year. This high-frequency iteration keeps repair costs high, directly increasing the claims ratio.
• Manufacturing Process Characteristics: NEVs often use integrated body designs to reduce production costs. However, repairs after accidents require replacing associated parts (for example, while a gasoline vehicle may only need a bumper replacement, an NEV may involve multiple component assemblies), significantly raising repair costs and claim amounts.
• Driving Behavior Characteristics: NEVs excel in acceleration and feature regenerative braking and single-pedal driving, which changes driving habits. Coupled with a younger owner demographic, this leads to a higher frequency of claims compared to gasoline vehicles. Thus, premium pricing is not merely linked to purchase price; driving behavior-induced risk frequency is a key influencing factor.

Industry experts generally anticipate that as NEV technology matures, iteration speeds slow, supply chains improve, and driving habits optimize, the claims ratios for NEVs will gradually decrease, bringing overall premium levels back to reasonable ranges.

Why Are Premiums Rising Even for Claim-Free Owners?

Many car owners report that even if they have not filed any claims in a year, their premiums still tend to increase the following year. This contradicts the traditional car insurance logic of “no claims, no premium increase.” What are the driving factors behind this pricing trend?

Yuan explains that in traditional car insurance understanding, owners typically believe that not filing any claims will lead to a decrease in their premiums. However, NEVs may still see premium increases despite a lack of claims. This phenomenon requires analysis from the perspective of the underlying logic of the insurance pricing mechanism.

The “no claims, enjoy discounts” rule in the car insurance industry is primarily realized through the No Claims Discount (NCD) coefficient, which is uniformly established by the industry and determines the discount rate based on vehicle history. Usually, vehicles with no claims from the previous year will see their premiums decrease due to a lower NCD coefficient. However, some NEV owners still face rising premiums due to two main reasons:

• Structural Adjustments to the Overall Discount Coefficient: The car insurance pricing system includes various factors such as the insurance company’s own coefficients, NCD coefficients, and traffic coefficients. In 2024, the overall loss for NEV insurance in the entire industry reached 5.7 billion yuan, prompting insurance companies to raise their own pricing coefficients based on a multi-dimensional risk assessment model that considers “people, cars, and environment” combined with historical claims data. Given that the overall claims ratio for NEVs is significantly higher than that for gasoline vehicles, their risk ratings are generally higher, resulting in increased coefficients and consequently higher premiums.
• Upgraded Insurance Needs Driving Coverage Increases: As compensation standards for personal injury continue to rise, the traditional 1 million yuan third-party liability coverage is often insufficient to cover risks. Many owners opt to raise their coverage to between 2 million and 5 million yuan. Additionally, NEV owners are becoming more aware of risks and are proactively purchasing additional insurance for charging accidents and battery warranties, which directly increases premium expenditures.

It is worth noting that in normal circumstances without any claims, NEV premiums still typically follow the “no claims, enjoy discounts” principle, with a high likelihood of decreasing premiums.

How Should Owners Build Insurance Strategies Based on Different Use Cases?

Faced with a variety of insurance types and coverage options, how can car owners construct the most cost-effective insurance solution? What principles should guide the configuration between basic protection and personalized needs?

Yuan suggests that car owners should select different types of insurance protection plans based on their usage scenarios and needs, generally categorized into three types:

• Basic Protection: Suitable for drivers with low mileage, fixed routes, and proficient driving skills. This plan focuses on compulsory insurance (statutory mandatory insurance) complemented by 500,000 to 1 million yuan third-party liability, usually without damage coverage. The rationale is that vehicle loss can be quantified, whereas third-party liability risks (such as personal injury or property damage) may result in immeasurable compensation liabilities that need priority coverage.
• Economical Protection: Targeted at cost-sensitive drivers with a neutral risk preference. This plan adds damage coverage and includes 1 million to 2 million yuan third-party liability on top of compulsory insurance, along with 10,000 yuan per passenger liability or small driver accident insurance. While this combination is conservatively set, it covers primary risk scenarios and meets basic protection needs for daily usage, achieving a balance between risk and cost.
• Comprehensive Protection: Designed for new car owners, less experienced drivers, or risk-averse users, emphasizing high coverage for the vehicle, third-party responsibility, and passengers. This includes damage coverage (covering vehicle loss), 2 million to 3 million yuan third-party liability (addressing high third-party compensation), and 20,000 to 30,000 yuan per passenger liability (focusing on medical injury costs), with the option to add 100,000 to 200,000 yuan for driver accident insurance. Additionally, NEV owners may opt for charging accident insurance based on the vehicle’s age and consider purchasing warranty products for the core battery and electrical systems for vehicles over five years old that are beyond the manufacturer’s warranty.

In summary, car owners can flexibly choose suitable insurance protection plans that meet both risk coverage and cost optimization goals by considering factors such as usage frequency, driving skills, risk tolerance, and vehicle characteristics (like NEV attributes and usage age).

What Should Owners Focus on to Avoid Low-Price Traps When Insuring Online?

Insurance quotes from online channels are often more attractive, but the details of coverage can vary. While seeking price advantages, what key clauses and details should car owners pay attention to in order to avoid falling into “low-price traps”?

In fact, insurance terms are uniformly established nationwide. Regardless of whether insurance is purchased online or offline, the scope of coverage and claims standards remain consistent. Therefore, car owners can obtain the same coverage details through online channels as they would through offline purchases.

Online insurance channels generally have price advantages due to the elimination of intermediaries, but the purchasing process must be fully self-operated. When choosing to insure online, car owners should focus on the following four aspects:

• Choose a Reputable Insurance Platform: Prioritize purchasing insurance through official insurance company websites or authorized platforms, and avoid non-official channels to mitigate insurance risks.
• Confirm Coverage Types and Amounts: Carefully verify the types of insurance and corresponding coverage amounts to ensure they align with personal needs.
• Review Policy Details: Pay special attention to the specific content of exclusion clauses in the policy, as well as the coverage scope and compensation ratios of additional insurances (such as standards for disability levels in passenger accident insurance).
• Be Wary of Low-Price Traps: Some non-official organizations lure customers with low prices. Therefore, car owners need to enhance their risk awareness, ensuring they choose regulatory-approved insurance companies and legitimate purchasing channels to avoid losing legal rights due to a desire for lower prices.

In summary, while seeking price advantages in online insurance, it is essential to strengthen the review of the qualifications of the insurance platform and policy details to ensure that the purchasing behavior is legal and compliant, with adequate coverage.

Innovations in Claims Processing: Exploring Smart Upgrades

Whether or not to file an insurance claim for minor damages has become a dilemma for many car owners. Considering both financial costs and protection of rights, how can one define the threshold between “self-paid repairs” and “insurance claims”?

In minor accident scenarios, the decision to choose self-paid repairs or initiate insurance claims should weigh the balance between the cost of a single repair and the potential increase in next year’s premium due to filing a claim. The principles for judgment are as follows:

• Single-Party Accident Scenarios: If the repair cost is lower than the expected increase in next year’s premium due to filing a claim, it is advisable to handle repairs out of pocket.
• Multiple-Party Responsibility Accidents or High-Damage Scenarios: If the accident involves third-party responsibility that requires compensation or if repair costs exceed the anticipated premium increase, filing a claim through insurance is more cost-effective. It is important to note that the number of claims not only affects next year’s premium but can also have a lasting impact on rates for the next three years, so car owners should carefully evaluate their decision to report.

For example, if the vehicle only has minor scratches on the bumper or door, with repair costs typically ranging from 300 to 500 yuan, owners can weigh the decision of whether to file a claim. However, if the damage involves replacing a door or bumper, or if the headlight assembly is damaged, with higher repair costs, it is advisable to utilize insurance claims to protect one’s rights.

Zhong An Insurance offers clients intelligent decision-making support. Its self-developed pre-warning claims estimation system can automatically identify small loss incidents that may significantly impact next year’s premiums after a claim is filed, providing real-time pop-ups or SMS notifications to help clients assess the economic feasibility of reporting, ensuring maximum benefit for clients.

In conclusion, decisions regarding reporting minor incidents should be based on a quantitative analysis of accident responsibility types, repair costs, and premium impacts. Low-cost claims may be handled out of pocket to avoid rate fluctuations, while high-cost or responsible incidents should promptly utilize insurance protection through scientific decision-making to optimize risk costs.

How is AI Reshaping Claims Processing in NEV Insurance?

Technology is reshaping the form of insurance services. In the realm of NEV insurance, how is Zhong An Insurance leveraging AI technology to enhance the claims process?

Zhong An Insurance is advancing intelligent upgrades in the claims process for NEVs through innovative measures such as video claims and AI technologies, creating a more efficient and transparent service experience for car owners. Their core innovations manifest in three main dimensions:

• Efficiency Innovations in Video Claims and AI Assessment: By utilizing mini-programs, apps, or 5G telephony, they have established a “one-click video reporting” channel. This includes an NFC touch-triggered reporting feature, enabling real-time video connections between the accident scene and claims adjusters. Relying on their self-developed AI tools for assessment, the system guides car owners through on-site inspections via voice and image interactions, eliminating the need to wait for personnel to arrive. Claims can be processed and paid within 10 minutes. Furthermore, using AI image recognition technology, they analyze vehicle damage photos against digital models of core components like batteries and circuits, allowing accurate repair cost calculations while controlling human error within 5%, and reducing average case handling times to under one business day.
• Smart Liability Definition and Data Ecosystem Integration: They have created a cross-platform data collaboration mechanism. With electronic customer authorization, they can quickly extract video data from NEV cameras to perform initial liability assessments. For disputed claims, they remotely access vehicle OBD (on-board diagnostics) data, using intelligent algorithms to analyze key parameters like driving trajectories and braking frequency to accurately define the cause of faults and assign liability proportions, improving the processing time for disputed cases by over 40%.
• Full Process Digitalization of Transparent Repair Facilities: A closed-loop service system of “online reporting — smart dispatch — transparent repairs” has been established. After reporting, the system intelligently recommends certified repair shops based on geographical location and vehicle models, providing standardized labor and parts pricing. Using blockchain technology, the entire repair process is recorded in real-time, allowing car owners to track the source of parts (e.g., original or substitute), construction steps, and quality inspection reports through the app, ensuring repair records are traceable and verifiable. This model effectively addresses traditional issues such as “over-repair” and “mixed parts use,” increasing customer trust in repair services by 65%.

(Disclaimer: The content and data in this article are for reference only and do not constitute investment advice. Investors operate at their own risk.)