People's Insurance Company of China Property & Casualty Party Committee Secretary: New energy vehicle insurance faces three major challenges, and the overall combined ratio is expected to improve this year.

On March 27, Zhang Daoming, a member of the Party Committee of PICC and the Party Committee Secretary of PICC Property & Casualty Insurance, said at the PICC 2025 annual performance briefing that, with the rapid increase in the penetration of new energy vehicles, the share of underwriting volume of new energy vehicles in the 2025 auto insurance industry has already reached 12.75%, which is critically important to auto insurance profitability.

He believes that, overall, new energy vehicle insurance faces three major challenges. First, the claim frequency rate of new energy vehicles is high, far exceeding that of gasoline vehicles. Second, there are insufficient socialized repair channels, so vehicle repair costs are relatively higher. Third, both the proportion of bodily injury claims and the compensation standards are showing an upward trend, with average claim payouts per case increasing. All of these have kept the claims pressure for new energy vehicle insurance at a high level.

Zhang Daoming said that although it faces challenges, PICC has actively leveraged its advantages in areas such as data, pricing, channels, and costs, and has already built leading advantages in the new energy vehicle insurance sector.

He also pointed out that, currently, some positive factors have emerged in new energy vehicle insurance. First, influenced by multiple factors such as an increase in the share of used cars, improvements in driving behavior habits, and progress in assisted driving technology, the claim frequency rate of new energy vehicles has shown a downward trend. Second, according to data, freight trucks equipped with automatic emergency braking systems (AEB) have a 7% lower claims risk than freight trucks not equipped, mainly reflected in lower average claim payouts per case. Third, a risk grading system for domestic new energy vehicle models is being planned and built; once the grading system is introduced, it will surely prompt automakers to pay more attention to and continuously improve the safety of their models and the economic efficiency of repairs, thereby ultimately lowering vehicle repair costs and benefiting the broad consumer base of new energy vehicle customers.

“From the expense ratio perspective, in 2026, regulation will further consolidate the alignment of report and payment, strengthen the three mechanisms, rectify illegal and irregular conduct, and standardize market order, so the expense ratio will remain stable and improve gradually.” Zhang Daoming said. Taken together, it is expected that in 2026 the new energy vehicle insurance combined cost ratio will further improve and the profitability level will further increase.

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