China Banking Insurance Regulatory Commission (CBRC) : the comprehensive reform and reduction of auto insurance fees will yield more than 250 billion yuan in profits

2022-04-29 0 By

In September 2020, the China Banking Insurance Regulatory Commission (CBRC) formulated and issued the Guidance on the Implementation of the Comprehensive Reform of Auto Insurance, which was implemented nationwide on September 19, 2020.On March 17, a reporter from 21st Century Business Herald learned from the China Banking and Insurance Regulatory Commission (CBRC) that the phased goals of “lowering prices, increasing insurance coverage and improving quality” have been basically achieved since the implementation of the reform more than a year ago. Consumers generally benefit from the reform and the driving force for sustainable development of the industry has been effectively strengthened.First, more than 250 billion yuan of profits have been generated through the reduction of fees, and consumers have a significantly enhanced sense of benefit.The vast number of consumers in the comprehensive reform of auto insurance has gained real dividends.By the end of 2021, the average premium of consumers’ cars was 2,761 yuan, down 21% compared with before the reform, and 87% of consumers’ premium expenditure decreased.According to estimates, the reform has reduced the spending of China’s auto insurance consumers by more than 250 billion yuan.At the same time, the average non-indemnity preferential coefficient (NCD coefficient) of commercial auto insurance decreased from 0.789 before the reform to 0.750, and many car owners with good driving habits and low risk frequency enjoyed more preferential premiums.Second, the degree of protection is significantly improved, and the function of auto insurance is effectively played.In the comprehensive reform of auto insurance, the insurance coverage for compulsory traffic insurance will be increased from 122,000 yuan to 200,000 yuan while prices remain unchanged.On this basis, the average insurance amount of commercial third party liability insurance has reached 1.57 million by the end of 2021, an average increase of 650,000 yuan compared with before the reform, among which the insurance amount of 1 million yuan or more accounted for 91%.At the same time, commercial insurance coverage rose to 88% from 80% before the reform.Auto insurance compensation increases, the degree of protection is improved, the function of further play.For example, in the severe rainstorm disaster in Henan in 2021, the auto insurance compensation paid by the whole industry has exceeded 7 billion yuan, of which nearly 900 million yuan has benefited from the reform measures to add engine water-related losses into the main insurance liability of auto loss insurance, playing an important role in safeguarding people’s life and property safety.Third, the compensation level has been greatly improved, and the company’s business structure has been significantly optimized.According to the target set by the comprehensive reform of auto insurance, the comprehensive loss ratio of auto insurance rose to 72.4% at the end of 2021, up nearly 13 percentage points from the same period last year. Auto insurance benefits more consumers.At the same time, the comprehensive reform of auto insurance has promoted the adjustment and optimization of business structure in the whole industry. Auto insurance has significantly decreased its share in property insurance business, while liability, health, agricultural and other insurance products closely related to serving the real economy, improving people’s livelihood and rural revitalization have received more attention and improved development.Fourth, the cost level dropped significantly, and the order of the auto insurance market improved significantly.The comprehensive reform of the car insurance to take effective measures from the fundamental pressure drop cost space.By the end of 2021, the rate of comprehensive auto insurance fees across the country dropped by nearly 11 percentage points year-on-year, including a 5 percentage point drop in the formalities rate and a 6 percentage point drop in the business and management rate.At the same time, the government maintained a high pressure situation, and continued to take regulatory measures such as law enforcement inspection and administrative penalties to effectively maintain the stable and healthy development of the auto insurance market.Fifth, the first innovative energy vehicle exclusive insurance products, service national major strategy.Focusing on supporting the development of the new energy vehicle industry and helping to achieve the “dual carbon” goal, China’s first exclusive insurance product for new energy vehicles was officially launched in December 2021, which not only provides guarantee for the “three power” system, but also comprehensively covers the use scenarios of driving, parking, charging and operation of new energy vehicles.It covers not only the loss of the vehicle itself, but also the property loss and personal injury caused by auxiliary equipment such as charging piles, which can better meet the insurance needs of consumers of new energy vehicles.In the next step, THE CBRC will fully implement the new development concept, focus on the work objectives of “consolidation, optimization and innovation”, unswervingly deepen the comprehensive reform, accelerate the high-quality development of auto insurance, and better meet the needs of the people for insurance protection.