"Electric Vehicles That Car Owners Can't Afford to Maintain, and Insurance Companies Can't Afford to Compensate for" | Kejin · Finance
Author | Wang Hanyu
Editor | Zheng Huaizhou
The Guangzhou Auto Show is in full swing. From BYD "taking over the entire exhibition hall" to Lei Jun once again creating a "top traffic" scene, and then SAIC Audi collaborating with Zheng Qinwen to launch the luxury electric brand AUDI, almost all the spotlights both online and offline have been given to new energy vehicles.
At the same time, the disclosure of Xiaomi Group's third-quarter report has made "Xiaomi loses 30,000 yuan for each car sold" a trending topic.
Admittedly, this is a conclusion drawn by "roughly" apportioning Xiaomi's early investment in the automotive business and the short-term delivery scale. However, for the title of "Electric Daddy", the majority of new energy vehicle owners may have a deeper feeling.
Currently, when searching for topics related to new energy vehicle insurance on various social platforms, Complaints about high premiums, expensive renewals, and higher costs than fuel vehicles are still very common.
"A car worth less than 140,000 yuan, with a new car's first insurance costing 6,200 yuan. It's simply robbery."
"My 500,000-yuan fuel vehicle's insurance premium is cheaper than this."
"Paying insurance for a few more years could buy a new car."
"I haven't had any accidents, but this year it has increased by 2,000 yuan."
"My annual insurance and fuel costs are not this much."
...
While a group of vehicle owners are complaining about the high pricing of new energy vehicle insurance, although the premium income of property insurance companies is continuously increasing, Most are still struggling to break even. For the property insurance field where auto insurance is the main force, this may to some extent mean that new energy vehicles have also become "Electric Daddies" that insurance companies cannot afford to compensate for.
Xiaomi's Insurance Premium of 300,000 Yuan Surpasses That of 400,000 Yuan BBA
In April this year, Yang Qi, who settled in Shenzhen, happily got his first car, the Xiaomi SU7 Founders Edition, with a landing price of about 300,000 yuan. Because it was his first car purchase, for the sake of stability, Yang Qi chose to directly purchase insurance in the Xiaomi Automobile APP.
He recalled to 36Kr that at that time, there were three options in the APP: PICC, Ping An Insurance, and Pacific Insurance, with the same quotations. The basic version was about 9,500 yuan, and the exclusive version was about 9,900 yuan, with only slight differences in rights and interests. After some comparison, Yang Qi chose PICC.
"The insurance premium of 9,900 yuan may be equivalent to that of a 400,000-yuan BMW or Audi." When talking about the first insurance purchase, Yang Qi said this. Combining the homework he did when buying the car, he said that the auto insurance quotation in Shenzhen is itself higher than that in most cities in the country, and the insurance premium for new energy vehicles is also higher.
Data statistics confirm Yang Qi's individual feeling. According to the "New Energy Vehicle Insurance Market Analysis Report" released by the China Banking and Insurance Information Technology Management Co., Ltd., The average insurance premium for new energy vehicles is about 21% higher than that for fuel vehicles.
Jiang Han, a senior researcher at Pangoal Institution, also mentioned that his recently newly purchased Li Auto new energy vehicle, with a vehicle price lower than the fuel vehicle he previously drove, but the first insurance premium reached more than 7,000 yuan, which is about twice as expensive as the previous vehicle. And before this, his new car was also rejected by Ping An Insurance.
Regarding the reasons for the high premium of new energy vehicle insurance, Jiang Han analyzed to 36Kr that first, the technology of new energy vehicles is updated rapidly, and the vehicle value assessment is more complex. Insurance companies need to invest more resources in risk assessment and pricing, which increases operating costs.
Secondly, The core components such as batteries and motors of new energy vehicles have a high cost, and once damaged, the maintenance cost is expensive, which directly leads to an increase in the compensation cost. Insurance companies have to increase premiums to cover potential risks.
Furthermore, Jiang Han believes that the new energy vehicle market is still in a rapid development stage, and the relevant data accumulation is insufficient, making it difficult for insurance companies to accurately predict risks. Some insurance companies therefore adopt a cautious attitude and set more strict renewal conditions.
In addition, Xiaomi vehicle owner Yang Qi also added two reasons based on his individual experience. One is that based on the pricing range and brand image of models such as Xiaomi, the young group who purchase a car for the first time accounts for a large proportion among new energy vehicle owners, and the accident rate of novice drivers is often higher; the second is that the horsepower of the model he purchased is relatively large, and it takes a longer running-in period for the owner to control it freely.
"To achieve the horsepower performance parameters of Xiaomi in a fuel vehicle, it may cost more than 1 million or even several million yuan. Before this, the owners of Xiaomi vehicles actually have very little driving experience of million-level vehicles, so novices are indeed prone to accidents. The acceleration of electric vehicles is much faster than that of fuel vehicles." Yang Qi said.
At the same time, an automotive engineer also gave a further explanation to 36Kr from a professional perspective. The characteristic of new energy vehicles is that they are motor-driven, with a large driving torque, fast speed-up, linear acceleration, and at the same time, they have good quietness because there is no engine noise and vibration.
Reflected in the accident rate, the research report of Dongwu Securities shows that the accident rate of new energy vehicles is about 2.5 times that of traditional fuel vehicles. The statistics made by Shenwan Hongyuan Research Report for vehicle damage insurance also show that The accident rate of household vehicles, which account for the highest proportion of new energy vehicles, is as high as 30%, significantly higher than 19% of fuel vehicles.
Insurance Companies, Struggling to Break Even
Dongwu Securities analysis shows that the high accident rate of new energy vehicles, combined with factors such as a high proportion of commercial vehicles, a high proportion of young customers, high usage intensity, and high maintenance difficulty, jointly push up the compensation rate of new energy vehicle insurance.
Previously, according to the research report of Shenwan Hongyuan, The average compensation rate of new energy vehicle insurance is close to 85%.
And the higher compensation rate directly pushes up the comprehensive cost rate of property insurance companies, thereby increasing their underwriting pressure.
Observing the latest data, according to the statistics made by Huibaotianxia based on the solvency reports of 84 property insurance companies in the first three quarters of 2024, although the comprehensive cost rate of 49 insurance companies has decreased, but there are still 52 companies with a rate exceeding 100%. In other words, more than half of the property insurance companies are still facing the risk of operating losses.
As is well known, auto insurance occupies the main position in the property insurance business of insurance companies. With the continuous increase in the penetration rate of new energy vehicles in recent years, The growth rate of the premium scale of new energy vehicle insurance has absolutely surpassed the average premium of auto insurance. For example, in 2023, the growth rate of the former is 80%, while the average of the latter is only 2%.
Dongwu Securities predicts that by 2025, the premium scale of new energy vehicle insurance will reach 194.7 billion yuan, accounting for about 20.1% of the total premium of auto insurance; by 2030, the premium scale will reach 482.1 billion yuan, accounting for about 37.1% of the total premium of auto insurance.
This means that the impact of new energy vehicle insurance on the profitability of property insurance companies will deepen in the future.
Back to the present, the performance of new energy vehicle insurance is still a drag on insurance companies. For example, Yu Ze, Vice President of PICC and President of PICC Property and Casualty Insurance, mentioned at the 2023 performance release conference that the comprehensive cost rate of new energy vehicle insurance is relatively high, "The comprehensive cost rate of the commercial insurance part of the company's new energy vehicle insurance is about 7 percentage points higher than the overall comprehensive cost rate of auto insurance."
Another example is BYD Property and Casualty Insurance, a "new force" that just entered the auto insurance market in April this year, and it has not yet broken through the situation of increasing revenue without increasing profits. Its latest solvency report shows that the company achieved insurance business income of 546 million yuan in the first three quarters, of which the income in the third quarter was 478 million yuan. At the same time, the company accumulated a loss of 87.8097 million yuan in the first three quarters, and a loss of 106 million yuan in the third quarter alone.
So with the continuous increase in the penetration rate of new energy vehicles, will new energy vehicle insurance continue to drag down the profit level of property insurance companies in the future?
In this regard, Jiang Han analyzed that this may indeed pose certain pressure on the property insurance performance of property insurance companies, but this also prompts insurance companies to continuously optimize the pricing model and improve the risk management ability to cope with market changes. Dongwu Securities also mentioned that the emergence of new energy vehicles and driverless vehicles has put forward a new development logic for the property insurance industry, The insurance industry must reshape the development model of auto insurance.
When it comes to whether there is still room for the premium of new energy vehicles to decrease in the future, Jiang Han believes that this depends on multiple factors. On the one hand, with the maturity of new energy vehicle technology and the expansion of the market, the scale effect is expected to reduce operating costs; on the other hand, the improvement of insurance companies in risk management can also promote the rationalization of premiums. But at the same time, factors such as changes in compensation costs and policy adjustments may also have an impact on premiums.
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