Volume Growth Without Profit Gains

In 2025, new energy vehicle (NEV) sales soared to record levels, and the vehicle insurance market expanded rapidly in tandem.

Recently, the China Association of Actuaries and China Banking and Insurance Information Technology Management Co., Ltd. jointly released the 2025 claims data for NEV insurance. The industry underwrote 43.58 million NEVs (41.81 million passenger vehicles and 1.77 million commercial vehicles), marking a 40.1% year-on-year increase. Premium income reached RMB 190 billion, with risk coverage totaling RMB 159 trillion.

NEV insurance has emerged as the fastest-growing segment within the vehicle insurance market.

However, despite this massive market expansion, the entire NEV insurance sector reported underwriting losses of RMB 5.6 billion in 2025.

Judging from the financial reports of property insurance companies, only the NEV segments of China Ping An, China Pacific Insurance, and People’s Insurance Company of China (the “Big Three”) achieved profitability. Most insurers remain trapped in a structural paradox: car owners complain about high premiums, while insurers struggle with losses.

The market has grown, but profits have not followed. Where does the problem lie?

Persistent Challenges

Ultimately, the contradiction between “high premiums” and “high claims” for NEVs stems from industry growing pains driven by the structural characteristics of these vehicles.

Zhang Daoming, Secretary of the Party Committee of PICC Property and Casualty, stated at PICC’s 2025 annual results briefing that NEV insurance faces three major challenges:
1. NEVs have a significantly higher claims rate than fuel-powered vehicles.
2. A shortage of specialized repair channels leads to elevated vehicle repair costs.
3. Personal injury claims and compensation standards are rising, with average claim amounts increasing.
These factors collectively create high claims pressure for NEV insurance.

A clear example is that NEVs, due to their low operating costs, have become the preferred choice for commercial vehicles. Many private cars are used for ride-hailing services, driving up the overall claims rate. Some sales representatives have noted that premiums for several popular NEV models are directly influenced by their high claims rates due to frequent ride-hailing use.

Additionally, factors such as regional differences, insurer variations, and vehicle usage durations cause significant premium disparities for the same NEV model. Following comprehensive vehicle insurance reforms, traffic violation coefficients have been integrated into pricing systems. In March of this year, the vehicle insurance system was nationally linked with traffic management data, making it impossible to avoid violations recorded in different regions or when switching insurers, as violation records directly increase premiums.

The new NEV insurance regulations implemented in April this year further refined core elements such as independent pricing, coverage for the three-electric systems (battery, motor, and controller), and separate coverage for vehicles and batteries. High-risk drivers (those with multiple claims within a year or serious traffic violations) will face premium increases, with the pricing coefficient cap raised to 1.45. Theoretically, premiums could rise by up to 3.57%, and when combined with adjustments to the no-claim discount coefficient due to claim frequency, the overall increase is even greater. Premiums for commercial NEVs will also rise significantly under the new rules.

For high-quality drivers (those with no claims for three or more consecutive years and no serious traffic violations), premium discounts will expand, with the pricing coefficient floor lowered to 0.55. Theoretically, premiums could decrease by an additional 8.33%, and when combined with optimizations to the no-claim discount coefficient, the overall reduction is even more substantial.

In other words, vehicle insurance pricing is shifting from “vehicle-based” to “driver-based,” with differentiated pricing based on driving behavior becoming increasingly important.

Looking back at the 2025 industry losses in NEV insurance, signs of refined operations are emerging. While the underwriting loss of RMB 5.6 billion remains substantial, it represents a RMB 100 million reduction from RMB 5.7 billion in 2024—a 1.75% decrease—while the combined cost ratio declined by 1.3 percentage points year-on-year. This reflects improvements in cost control, risk screening, and operational refinement by the insurance industry in its NEV insurance business.

Industry Differentiation

In the past, limited data accumulation prevented insurers from accurately assessing NEV risks, leading to conservative pricing. Today, technological advancements and continuous data collection have made precise, “individualized” vehicle insurance pricing models possible, enabling insurers to evaluate risks more accurately.

The core adjustments in NEV insurance will continue to drive insurers to transition from “model-oriented” broad pricing to “risk-oriented” refined pricing, compelling them to adjust their strategies. This shift marks a turning point for the future development of insurance companies.

The fact that the three leading insurers—PICC, Ping An, and CPIC—achieved profitability ahead of others is directly tied to their economies of scale, data accumulation, and pricing capabilities.

In 2025, PICC Property and Casualty underwrote 15.56 million NEVs, a 34.3% year-on-year increase; its NEV insurance premium income reached RMB 67.1 billion, up 31.9% year-on-year. Ping An Property & Casualty’s NEV insurance premium income was RMB 52.48 billion, a 39.0% year-on-year increase, with a market share of 27.7%. CPIC Property and Casualty’s NEV insurance premium income was RMB 25.017 billion, a 5.6% year-on-year increase, accounting for 22.6% of its overall vehicle insurance business.

The total NEV insurance premiums of the three leading insurers in 2025 reached RMB 144.597 billion, accounting for 76.1% of the industry total, with market concentration continuing to rise. Their massive underwriting scale has generated vast claims data, enabling a virtuous cycle of “scale—data—pricing—cost control.”

Zhang Daoming stated that a domestic risk classification system for NEV models is currently under development. Its introduction will encourage automakers to prioritize and improve vehicle safety and cost-effective repairs, ultimately reducing repair costs and benefiting NEV consumers. It is expected that the downward trend in NEV insurance claims rates will continue in 2026, with further improvements in the combined cost ratio and profitability.

Meanwhile, following the joint release of the Guiding Opinions on Deepening Reforms, Strengthening Supervision, and Promoting High-Quality Development of New Energy Vehicle Insurance by four departments, including the National Financial Regulatory Administration, in January 2025—which proposed researching and exploring commercial vehicle insurance products for the “vehicle-battery separation” model—the Beijing Financial Regulatory Bureau announced at the Zhongguancun Forum Annual Conference in March that Beijing would lead the nation in developing and applying commercial insurance for intelligent connected NEVs. This will optimize and upgrade existing NEV insurance, achieving unified adaptation for intelligent connected NEVs across all levels from L2 to L4.

As insurers refine their pricing models, the widespread adoption of driving assistance technologies reduces accident rates, and regulators advance the standardization of “usage-based insurance,” risk pricing models will increasingly emphasize vehicle data and driving behavior, leading to further premium differentiation based on risk.

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