Last year, new energy vehicle insurance underwrote a loss of 5.6 billion yuan. How are leading insurance companies able to reduce costs?

(Source: China Electric Power News)

Reprinted from: China Electric Power News

On March 31, the China Actuaries Association and China Banking and Insurance Regulatory Commission released data showing that by 2025, China’s insurance industry will underwrite 43.58 million new energy vehicles, with corresponding premium income of 190 billion yuan, providing risk coverage of 159 trillion yuan. Meanwhile, industry underwriting losses reached 5.6 billion yuan, a decrease of 1.59M yuan year-on-year, and the combined cost ratio decreased by 1.3 percentage points year-on-year.

Although the pressure on claims for new energy vehicle insurance remains high, leading property insurance companies have leveraged advantages in data, pricing, channels, and costs to establish a leading position in the field of new energy vehicle insurance.

Notably, the “Big Three” property insurers have all announced profitability in their new energy vehicle insurance businesses.

The 2025 annual reports show that Ping An Insurance has achieved underwriting profit in its new energy vehicle insurance business for the year.

Chen Hui, General Manager of PICC Property & Casualty, stated that the overall cost situation of new energy vehicle insurance has significantly improved, and the business for household new energy vehicles has entered a stable profit zone.

Zhang Daoming, Party Committee Member of PICC and Secretary of the Party Committee of PICC Property & Casualty, pointed out at the performance briefing that in 2024, the company’s reported claims ratio for new energy vehicle insurance has decreased, and it is expected to continue to decline in 2025. The trend of decreasing claims rate is expected to persist into 2026, and the comprehensive cost ratio of new energy vehicle insurance will further improve, with profitability further increasing.

“Big Three” Enter Profitability Zone

In 2025, how did the leading insurers’ new energy vehicle insurance “report card” look?

In terms of insured vehicles, PICC insured 15.56 million new energy vehicles throughout the year, a 34.3% increase; Ping An insured 12.84 million new energy vehicles, a 44.8% increase; and PICC Property & Casualty provided coverage for over 6.3 million new energy vehicles last year, a roughly 37% increase from 4.6 million in 2024.

Ping An announced for the first time in its annual report that its new energy vehicle insurance business achieved underwriting profit. The report shows that in 2025, the original insurance premium income for new energy vehicle insurance was 52.48 billion yuan, a 39.0% increase, with a market share of 27.7%, providing risk coverage of 52.34 trillion yuan for new energy vehicle owners. The entire year’s new energy vehicle insurance business achieved underwriting profit, with steadily improving profitability.

In 2025, PICC Property & Casualty’s new energy vehicle insurance premium income reached 100M yuan, accounting for 22.6% of the overall auto insurance business, up 5.6 percentage points year-on-year. Chen Hui said this was due to the company’s strategic layout in the early stages. The overall cost situation of new energy vehicle insurance has significantly improved, and the insurance for household new energy vehicles has entered a stable profit zone.

Zhang Daoming noted that with the rapid increase in the penetration rate of new energy vehicles, by 2025, the proportion of new energy vehicle underwriting in the auto insurance industry had reached 12.75%, which has a crucial impact on the profitability of auto insurance.

He believes that currently, positive factors are emerging in new energy vehicle insurance. First, due to factors such as the increasing proportion of old vehicles, improved driving habits, and advances in assisted driving technology, the accident rate of new energy vehicles is showing a downward trend.

Second, trucks equipped with automatic emergency braking systems (AEB) have a 7% lower claims risk compared to those without, mainly reflected in reduced average claims payments. “According to national standards, from July 1, 2026, new heavy-duty trucks will be required to be equipped with AEB; from January 1, 2028, light trucks will also be mandated to have AEB. This will be an important positive factor for improving the claims risk of new energy trucks,” Zhang said.

Third, a risk grading system for domestic new energy vehicle models is under preparation. The introduction of this system will promote automakers to pay more attention to and continuously improve the safety and repair economy of their models, thereby reducing vehicle repair costs and benefiting consumers of new energy vehicles.

“In terms of expense ratio, regulatory measures in 2026 will further consolidate the ‘reporting and operation as one’ policy, strengthen three mechanisms, rectify violations, and standardize market order, leading to a stable improvement in expense ratios,” Zhang said. He expects that the comprehensive cost ratio of new energy vehicle insurance will further improve in 2026, and profitability will continue to rise.

High Premiums and High Claims Still Present Contradiction

According to the Ministry of Public Security, by the end of 2025, the national stock of new energy vehicles reached 43.97 million, accounting for 12.01% of all vehicles; 12.93 million new vehicles were registered throughout the year, accounting for 49.38% of new vehicle registrations.

In terms of underwriting, in 2025, China’s insurance industry underwrote 43.58 million new energy vehicles, including 41.81 million buses and 1.77 million trucks, an increase of 12.48 million vehicles or 40.1% from the previous year.

The Daily Economic News reporter noted that in 2025, the industry’s new energy vehicle insurance premium income was 190 billion yuan. Based on this, the average premium per vehicle was about 4,360 yuan, a decrease of approximately 178 yuan from about 4,538 yuan in 2024, but still significantly higher than traditional auto insurance. Meanwhile, the industry’s overall cost ratio declined, but underwriting losses still amounted to 5.6 billion yuan.

Industry insiders believe that the contradiction between high premiums and high claims in new energy vehicle insurance reflects a deep mismatch between traditional auto insurance products and the structural features of new energy vehicles.

Zhang Daoming pointed out that the main challenges facing new energy vehicle insurance are threefold: first, the high accident rate of new energy vehicles, significantly higher than that of fuel vehicles; second, insufficient social repair channels, leading to relatively high repair costs; third, increasing proportions of personal injury claims and rising compensation standards, with average claims payments increasing. These factors keep claims pressure for new energy vehicle insurance high.

How to improve the claims ratio? Zhang said that PICC will continue to strengthen the construction of actuarial pricing talent teams, innovate pricing factors, optimize risk pricing models, and enhance risk identification and differential pricing capabilities for new energy vehicle insurance; promote cross-industry cooperation, facilitate the development of socialized repair networks for new energy vehicles, expand repair channels, and steadily reduce repair costs; improve personal injury claims measures to further lower injury compensation costs.

Chen Hui stated that PICC will further optimize costs and improve efficiency through a full lifecycle ecosystem. To enhance operational efficiency, the company will continue to optimize its proprietary online underwriting and cloud claims mechanisms, build dedicated customer management teams, currently covering mainstream brands in the industry. In claims management, the company implements centralized management by brand, outputs repair standards for major manufacturers, such as battery repairs and flood vehicle handling. By connecting directly with automakers’ after-sales systems, co-develop AI damage assessment models, and leveraging joint data labs to implement vehicle data applications, the company aims to fundamentally reduce risks and precisely lower costs. In ecosystem development, the company continues to enrich quality assurance and charging scenario-specific products, and actively participates in setting national industry standards for battery thermal runaway, repair processes, and more.

Intelligent Upgrades Bring New Challenges

With the deep integration of new-generation information technologies such as artificial intelligence and big data, the automotive industry is undergoing profound transformation. In 2025, the penetration rate of Level 2 and above intelligent driving exceeded 65%, expected to reach 80% in 2026. High-level assisted driving has already surpassed 15%, and is expected to reach 25% in 2026, with driving modes gradually shifting from human-led to system-led.

Against this backdrop, the risk characteristics and insurance needs of new energy vehicles have changed profoundly, bringing new challenges for product innovation and risk management in the insurance industry.

Zhou Yanfang, Director of the Strategic Research Center at PICC, said that the popularization of intelligent driving technology has changed the logic of accident responsibility, and the current legal framework and insurance product offerings have gaps.

For example, traditional motor vehicle liability insurance mainly covers external personnel, while onboard personnel are insured separately through seat insurance. However, under intelligent driving modes, as the system takes over dynamic driving tasks, the driver shifts from being the vehicle controller to a “user.” When accidents are caused by system errors, the driver may also become a victim. The industry has yet to clarify the protection rules for such scenarios, and it is necessary to study whether drivers should be included in mandatory liability insurance coverage or covered through product liability mechanisms.

Of particular note, dedicated insurance products for intelligent driving risks are underway. Recently, Beijing took the lead nationwide in launching the development and application of commercial insurance for intelligent connected new energy vehicles, aiming to optimize and upgrade existing new energy vehicle insurance to achieve full compatibility with Level 2 to Level 4 intelligent connected new energy vehicles.

The new products largely follow the existing commercial auto insurance system, adhering to the principles of “overall stability and partial optimization,” mainly providing risk coverage for specific intelligent driving scenarios, hardware/software losses, and other concerns of consumers and automakers.

In terms of upgrade direction, current auto insurance products mainly define drivers based on “human driving” scenarios, which are not fully applicable to Level 3 and Level 4 “human-machine co-driving” or “machine driving” situations. For Level 2 assisted driving vehicles, some consumers upgrade their systems at their own expense after purchasing new cars, but existing insurance products do not cover these losses, requiring further optimization.

Currently, leading insurers have proactively laid out intelligent driving insurance. What new changes in new energy vehicle insurance are worth expecting?

Disclaimer: The opinions in this article are solely those of the author and are for reference and discussion purposes only. They do not constitute any advice.

Editor: Wang Yibo