China Sees Sixfold Growth in NEV Insurance Premiums
China’s dominance in the global new energy vehicle (NEV) market is driving significant growth in related insurance premiums. According to a recent report by AM Best, these premiums have increased sixfold over the past five years. NEV premiums now represent 11.5% of the total motor insurance business in China, and AM Best anticipates this trend to remain a key growth driver.
Rising NEV adoption in China is fueling a rapid expansion of the insurance market.
The expansion of NEV insurance is supported by government policies, growing consumer demand for sustainable transportation, and technological advancements. However, this rapid growth has presented unique challenges. The higher claim frequency and repair costs associated with NEVs are impacting the profitability of smaller and medium-sized insurers. Large insurers, on the other hand, are leveraging their scale to expand market share and maintain a competitive edge in this growing segment.
China’s motor insurance market is largely controlled by three major players: People’s Insurance Company of China, China Pacific Property Insurance Co., Ltd., and Ping An Insurance (Group) Company of China, Ltd. These companies collectively hold around 70% of market premiums. Following comprehensive motor insurance reforms in 2020, these insurers have seen positive underwriting profits, consistently maintaining a combined ratio below the market average for the past seven years. Smaller insurers, however, have struggled to achieve the same level of profitability, especially in the NEV insurance sector, where combined ratios are generally higher than those for traditional motor insurance.
Another notable trend is the increasing involvement of automobile manufacturers in the insurance market. These manufacturers are acquiring domestic insurance brokers and establishing their own insurance companies. AM Best believes this development will alter the competitive environment and boost collaboration among market participants.
