In recent years, the surge in sales and production of new energy vehicles (NEVs) has catalyzed an intense debate around the topic of insurance for these vehiclesVarious media outlets have reported that, at similar price points, NEV insurance premiums can be as high as double those of traditional gasoline-powered vehiclesSome experts argue that while vehicle owners claim premiums are exorbitant, insurance companies are lamenting their losses, suggesting that there are no true winners in the NEV insurance marketRecently, a focus on deepening comprehensive reforms in commercial insurance for NEVs was announcedThe pressing question now is how the NEV insurance sector can break through its current dilemmas and enhance both quality and efficiency.

It is important to recognize that fluctuations in pricing are an inevitable part of the evolving landscape of NEV insuranceAs a mainstay product within the property insurance industry, auto insurance relies heavily on precise pricing, which is fundamentally determined by the law of large numbers—requiring a vast pool of underwriting and claims data to support accurate pricing

A look back at the development journey of traditional auto insurance elucidates that it too experienced a progression from an initial phase of inflated pricing, followed by stabilization and gradual declinesRecent statistics from the Ministry of Public Security indicate that as of the end of June 2024, there were 345 million vehicles in China, with NEVs accounting for only 24.72 million—a mere 8% of the totalThis underscores the fact that while the penetration rate of NEVs is on the rise, they still remain a niche segment within the broader automobile marketConsequently, for NEV insurance to meet consumer expectations, a period of time and accumulation of data will be necessary.

At present, one of the primary reasons for the high cost of NEV insurance premiums is the elevated claims ratio coupled with expensive repair costsWhether for gasoline or electric vehicles, automobiles are typically classified based on their usage—either for personal use or commercial operations

• Divergence in Monetary Policies: U.S. and Japan
• LPR Holds Steady
• Impact of Japan's Exit from Ultra-Loose Monetary Policy
• U.S. Stock Index Futures All Rise
• Fed Rate Cuts Won't Heal Europe's Economic Wounds

Notably, even for identical models, the insurance premiums can differ significantly with their use caseOwners of NEVs, due to their generally lower operating costs and newer model types, often opt to use them as ride-hailing vehiclesHowever, operational vehicles typically have a much higher incidence of insurance claims and associated payout rates than personal vehiclesIn order to maintain profitability, insurance companies may raise rates for certain models, thereby affecting the overall pricing levels of NEV insurance.

From a repair cost perspective, NEVs employ various advanced technologies such as laser radar and environmental perception sensors, which can make repairs quite complexWhen accidents occur, often these electronic components cannot be repaired individually; instead, they require complete replacementThis is particularly true for electric vehicles, where if a battery pack is damaged due to a collision or foreign object penetration, the safest course of action is to replace the entire unit

Given that the cost of a battery pack can account for 25% or more of the total vehicle price, this significantly inflates repair expenses.

A promising approach to resolving the challenges faced by the NEV insurance sector is to adopt a broader perspective on auto insuranceIt is essential for both the automotive and insurance industries to align with genuine market demands, shifting away from sensational marketing tactics toward innovative and principled solutions that enhance consumer satisfaction and perceived value.

To effectively reduce repair costs, automotive manufacturers can collaborate with insurance companies and parts suppliers to establish a more transparent pricing system and distribution mechanism for repairsWhen designing new models, manufacturers should also strive to achieve a balance between functionality and cost efficiency, focusing on improving the ease of maintenance and repairability to minimize post-accident repair challenges and costs.

From the perspective of insurance management, companies need to enhance their precision in pricing and risk control

By leveraging technological advances, insurers can reconstruct their pricing models to more accurately discern between commercial and personal use vehicles, thus improving pricing fairnessGreater data sharing with automakers can also offer sharper insights into the risk characteristics of NEVs, enabling the formulation of more reasonable premium policiesAdditionally, existing reforms in NEV insurance pricing must not only aim at lowering costs but also continuously update and enhance relevant insurance terms to bolster coverage levels, ensuring that vehicle owners enjoy greater benefits.

Auto insurance forms the backbone of the property insurance industry, and as the penetration of NEVs continues to rise, NEV insurance is poised to become a significant growth point for this sectorIn this light, overcoming the current developmental hurdles and enhancing the quality and effectiveness of NEV insurance is not only a necessity for the survival of this specific insurance product but also plays a pivotal role in helping the broader property insurance industry establish a trustworthy, reliable, and empathetic image.