Car owners complain about high prices while insurance companies claim to be making losses. Why are electric vehicle insurance premiums still rising?
The latest data from the China Association of Automobile Manufacturers shows that as of the end of July, new energy vehicle sales in 2025 have accounted for 45% of the total new vehicle sales. As new energy vehicles are gradually recognized and accepted by the public, problems with new energy vehicle insurance have gradually emerged.
Recently, it's common to see new energy vehicle owners complaining on social platforms. Even when a new energy vehicle has no insurance claims in the previous year, the insurance premium in the second year increases instead of decreasing.
Image source: Screenshots from Weibo and Xiaohongshu
In addition to the abnormal renewal prices, there are even situations where the final insurance premiums for new energy vehicles at different price points may be similar. For example, it was reported some time ago that the insurance premium difference between the 357,400 - yuan Xiaomi YU7 and the 948,000 - yuan Zunjie S800 was only a few hundred yuan.
What are the reasons behind these phenomena? What factors are the final insurance premiums related to? Is the insurance premium increase really all the fault of the insurance companies? Today, let's explore these questions in detail.
01
Mr. Huang from Hangzhou told Zhīwēi that he is the owner of a Geely ZEEKR 001. He had no insurance claims within two years after buying the car. When he was preparing to renew his insurance in the third year, he found that the total price of the two - item insurance of “vehicle damage + 3 million third - party liability” from the same insurance company was 1,395 yuan more expensive than the previous year.
The insurance agent of the insurance company explained that “the entire new energy vehicle insurance industry has increased prices.”
Although it's a bit hard to accept, this is indeed one of the reasons for the price increase, rather than an excuse for the insurance company to make excessive profits.
Data from the China Actuarial Association shows that in 2024, the insurance industry in China insured 31.05 million new energy vehicles, with a premium income of 140.9 billion yuan, providing a risk protection amount of 106 trillion yuan. The underwriting loss was 5.7 billion yuan, showing a continuous loss situation over the years. A total of 2,795 vehicle models were insured throughout the year, among which 137 vehicle models had a claim settlement ratio of over 100%.
Here, we'll supplement the concept of vehicle models in the insurance industry. A vehicle model is a collection of a class of vehicle types under an automobile brand. Different models of the same vehicle model often have similar insurance risk characteristics. Therefore, vehicle models are an important risk classification dimension for vehicle insurance.
As for the so - called “claim settlement ratio” in the data of the Actuarial Association, it is the core indicator in the insurance industry to measure the insurance company's claim settlement expenditure and premium income. The calculation formula is: Claim settlement ratio = (Claim settlement expenditure / Premium income) * 100%.
When the claim settlement ratio of a vehicle model exceeds 100%, it means that the insurance company has paid out more in claims than the premiums it has received for this vehicle model. Considering the insurance company's daily operating management and personnel expenses, this is a losing deal.
The claim settlement expenditure is basically equal to the product of the number of insurance claims and the average claim amount. When the claim rate and the average claim amount of new energy vehicles increase, the insurance company's claim settlement expenditure will increase. This leads to a question: Why are the claim rate and the average claim amount of new energy vehicles higher than those of fuel - powered vehicles?
The China Actuarial Association gives three explanations for the higher claim rate:
In terms of usage scenarios, new energy vehicles have a greater intensity of use due to their energy cost advantages;
In terms of user profiles, new energy vehicle owners are relatively younger, with shorter driving experience and higher driving risks. Data shows that the proportion of new energy vehicle owners under 35 years old is 14 percentage points higher than that of fuel - powered vehicle owners;
In terms of vehicle characteristics, new energy vehicles have a shorter zero - to - 100 - kilometer acceleration time and faster acceleration. Correspondingly, in case of an emergency, the reaction time left for the owner is also shorter.
In addition, Yang Yan (a pseudonym), a staff member at the claims department of Shenneng Property Insurance, told Zhīwēi that in the past, for mid - and low - end traditional fuel - powered vehicles, spare parts were cheap and highly replaceable, and repair shops had the corresponding repair technology. Therefore, for owners of these fuel - powered vehicles, as long as there is no major accident, they generally choose to find a repair shop for repairs by themselves to avoid the increase in insurance premiums in the second year.
However, new energy vehicles are different. Most new energy vehicle enterprises and power battery enterprises adopt a maintenance authorization model. Yang Yan mentioned that for many new energy vehicles, if equipment such as the headlights is damaged, it cannot be replaced at just any repair shop. It also needs to be matched with the vehicle identification number (vin code, Vehicle Identification Number). This means that when related parts are damaged in an accident, new energy vehicle owners cannot choose to find a repair shop for repairs by themselves but need to choose a 4S store.
Compared with repair shops, the prices of parts in 4S stores are relatively high. After considering the repair price and the increase in the next year's insurance premium, new energy vehicle owners often choose to file an insurance claim. As a result, the claim rate of new energy vehicles will also increase to a certain extent.
In terms of the higher average claim amount, on the one hand, new energy vehicles have a higher degree of intelligence, and the maintenance price of intelligent equipment is relatively expensive; on the other hand, new energy vehicles have a high degree of integration, and local damage to parts usually requires a complete set of maintenance and replacement.
Yang Yan gave an example. The radar installed on new energy vehicles is a relatively fragile intelligent component. In an extreme case, a slight deformation of the front bumper may damage the radar. Moreover, components such as the radar cannot be repaired and can only be replaced.
Yang Yan showed the editorial department of Zhīwēi a maintenance policy. The replacement price of a left - front radar is 2,510 yuan. In addition, for the intelligent sensing components of the vehicle, such as a camera, if it is accidentally scratched, an additional calibration fee of a few hundred yuan is required.
When the claim rate and the average claim amount increase simultaneously, the insurance company has to increase the new energy vehicle insurance premium income accordingly, that is, charge more premiums from new energy vehicle owners to keep the claim settlement ratio at a reasonable level.
02
The above content helps us understand the reasons for the general increase in new energy vehicle insurance premiums. But what about the problem faced by Mr. Huang, where the insurance premium increases even though the vehicle has no insurance claims?
This is mainly related to the calculation method of vehicle insurance and its formulation process.
Vehicle insurance is mainly divided into two categories: compulsory traffic accident liability insurance for motor vehicles (hereinafter referred to as “compulsory insurance”) and commercial vehicle insurance (hereinafter referred to as “commercial insurance”). Compulsory insurance is an insurance required by the state. Its basic premium rate is uniformly formulated by the state and implements a floating rate mechanism based on the principle of “rewarding the good and punishing the bad.”
The specific formula is: Final premium = Basic premium × (1 + Floating ratio related to road traffic accidents) × (1 + Floating ratio related to traffic safety violations).
Among them, the basic premium is the same nationwide for the same type of vehicle. For example, the basic premium for a privately - owned car with less than 6 seats is 950 yuan, and for a car with more than 6 seats, it is 1,100 yuan. The difference in the final compulsory insurance premium lies in the floating rate, that is, whether the insured vehicle has been involved in a road traffic accident or has committed traffic safety violations.
We can see that there are few factors affecting the price of compulsory insurance, so the change is not significant. In contrast, commercial insurance is more complicated.
Since the comprehensive reform of vehicle insurance in 2020, the calculation of commercial insurance basically uses the following formula.
In this formula, the no - claim discount coefficient (NCD coefficient) is one of the few variables in commercial insurance that is directly related to the owner's driving behavior. This coefficient is a reward - and - punishment mechanism for dynamically adjusting the premium based on the vehicle's historical claim records. Different insurance companies implement a unified standard, aiming to match risks with costs through the principle of “rewarding the good and punishing the bad.”
Generally, for the first - year insurance, the level is 0, and the coefficient is 1. If the vehicle is insured continuously for five years or more without any claims, the level is - 5, and the coefficient is 0.4. Calculate the number of level increases/decreases based on the number of consecutive years of insurance in the past three years. For each consecutive year of insurance, the level decreases by 1, and for each claim, the level increases by 1. The final level is the number of level increases minus the number of level decreases.
The benchmark pure risk premium in the formula is determined and dynamically adjusted by the China Insurance Association based on the loss probability and loss degree of the insurance subject. According to the information disclosed by the China Insurance Regulatory Commission, the benchmark pure risk premium is closely related to factors such as the vehicle's usage nature, the number of seats/stations/power, the service life, the vehicle model, and the region.
“The benchmark pure risk represents the average risk level of the industry. However, there are differences in regions, insurance types, vehicle types, risk preferences, and the management levels of different insurance companies.” Chen Zhijian, the chief actuary of Dadi Property Insurance, once mentioned. Therefore, each insurance company also needs to adjust the final premium according to its own situation by calculating the additional expense ratio and the independent pricing coefficient.
03
The influencing factors and specific models adopted by each insurance company for different vehicle models and different insurance types are kept confidential. However, generally, they consider aspects such as “from the person, from the vehicle, from the environment”.
The “from the person” factor mainly considers the driver's gender, age, driving experience, and the NCD coefficient. However, with the development of the times, the explanatory power of such risk variables is gradually weakening, and major insurance companies are also introducing new influencing factors.
With the development of Internet of Vehicles technology, insurance companies have begun to deeply mine driving behavior data (such as the number of times of sudden braking) to integrate vehicle and driver data and improve the ability of customer profiling and customer segmentation.
According to the previous remarks of Zhang Lang, the general manager of the product actuarial department of PICC Property and Casualty Company, the communication data of vehicle owners is also a good supplement to risk factors. For example, using a phone while driving indicates a higher risk coefficient for the vehicle owner.
The “from the vehicle” factor mainly includes the vehicle model, vehicle price, usage nature, safety performance, etc. For vehicle models, the “parts - to - whole ratio” of different vehicle models may be considered, that is, the ratio of the total price of vehicle parts to the vehicle's selling price. The higher the “parts - to - whole ratio,” the higher the vehicle's later maintenance cost.
Hao Ren, an actuary at a company in Shenzhen, told Zhīwēi that “in addition, we also introduce the parameter of vehicle mileage. If existing data shows that the average daily mileage of a vehicle model is longer, it may have a higher risk of insurance claims. The proportion of mileage driven in the early morning and during peak hours also affects the risk value of the vehicle model.”
“More specifically, the type of battery used in the vehicle and the charging method may also be used in the construction of the risk model.”
Therefore, the vehicle price is only one of the influencing factors in the insurance company's pricing model. Although there is a large price difference between the Xiaomi YU7 and the Zunjie S800, under the influence of various factors such as energy type, insurance region, claim rate data, and vehicle mileage, the final insurance premiums are similar.
In terms of environmental and regional factors, actuaries of each insurance company will consider the region, city, and social environment. “For example, in winter, the battery attenuation rate of cars is different in the north and the south. This also means that we need to consider regional factors when building the model,” Hao Ren said.
Since different insurance companies use different risk factors to build different models, there will be situations where different insurance companies offer different insurance premiums for the same vehicle. In addition, different insurance companies have different underwriting and claim settlement data, which also leads to different insurance premium prices for the same vehicle model.
“For example, for XX cars, the claim settlement ratio of Insurance Company A has exceeded 100%, while that of Insurance Company B is 75%. Then, it's very likely that Insurance Company A will require a higher insurance premium.” Yang Yan said, “Similarly, for Mr. Huang's car mentioned above, even though there have been no insurance claims in the past, the vehicle model may have a high claim settlement ratio with the insurance company. The insurance company will also increase the custom coefficient for this vehicle model accordingly, resulting in an increase in Mr. Huang's insurance premium.”
In short, in the short term, the increase in new energy vehicle insurance premiums is inevitable. On the one hand, the acceleration performance of new energy vehicles is generally higher than that of fuel - powered vehicles at the same price, increasing the probability of accidents. On the other hand, the strong position of new energy vehicle enterprises in the maintenance system keeps the maintenance cost high. These two factors together drive up the cost of insurance companies.
As for why you think your driving is very regular but the insurance premium still increases? Sorry, among the large amount of data of owners of the same vehicle model, you are just an individual case, and you have to passively pay for others.
This article is from the WeChat official account “Zhīwēi”. Author: Editorial Department of Zhīwēi. Republished by 36Kr with permission.