15 days countdown!
The comprehensive reform of auto insurance is coming. Are insurance companies ready?
On September 3, the China Banking and Insurance Regulatory Commission formally issued the "Guiding Opinions on the Implementation of Comprehensive Reform of Auto Insurance" (hereinafter referred to as the "Opinions on Comprehensive Reform of Auto Insurance"), which will be implemented on September 19.
This means that from today (September 4), there are only 15 days left to the formal implementation of the comprehensive auto insurance reform.
The comprehensive reform of auto insurance is here!
Where will the auto insurance market exceeding 800 billion yuan go?
Auto insurance is the "meal insurance" of my country's property insurance industry.
In 2019, my country's auto insurance underwriting motor vehicles reached 260 million, and the premium income was 818.9 billion yuan, accounting for 63% of property insurance premiums.
Since 2015, my country's commercial auto insurance has undergone many reforms, and the comprehensive reforms implemented this time include both commercial auto insurance and compulsory traffic insurance. The reforms are strong and involve a wide range of areas and are highly concerned by the industry.
Regarding the advent of the comprehensive reform of auto insurance, representatives of small and medium insurance companies said: “Since the reform has come, let’s find a way to deal with it!” Consumer representatives said: “I hope the service quality will be better after the reform and price reduction.” Industry analysts believe that in the short term The challenge is greater. The payout ratio will definitely go up, but the channel expenses will not necessarily come down. However, after the initial pains, the market will gradually return to rationality and the expense ratio will be effectively controlled.
Expected payout ratio
Increase by 10 percentage points to 75%
According to the opinions on the comprehensive reform of auto insurance, there are five areas that have attracted the most attention from the industry.
First, increase the liability limit for compulsory traffic insurance.
The total liability limit for compulsory traffic insurance has been increased from 122,000 yuan to 200,000 yuan, of which the death and disability compensation limit has been increased from 110,000 yuan to 180,000 yuan, the medical expenses compensation limit has been increased from 10,000 yuan to 18,000 yuan, and the property loss compensation limit has been maintained. 2,000 yuan unchanged.
The non-liability compensation limit will be adjusted in the same proportion. The death and disability compensation limit will be increased from 11,000 yuan to 18,000 yuan, the medical expenses compensation limit will be increased from 1,000 yuan to 1,800 yuan, and the property damage compensation limit will remain unchanged at 100 yuan.
Second, according to the comprehensive compensation rate level of the traffic compulsory insurance in each region, the regional floating factor is introduced into the road traffic accident rate adjustment coefficient. The upper limit of the floating rate remains unchanged at 30%, and the floating rate is expanded from the original minimum of -30% to -50% , To increase the preferential rate for consumers who have not paid.
Third, support the industry to increase the limit of commercial liability insurance for demonstration products from RMB 50,000 to RMB 5 million to RMB 100,000 to RMB 10 million.
Fourth, lower the additional expense rate.
The industry is guided to lower the upper limit of the additional expense ratio for commercial auto insurance products from 35% to 25%, and the expected loss ratio to increase from 65% to 75%.
Promptly support property and casualty insurance companies to report for approval and filing of commercial auto insurance products from online sales and e-commerce channels where the upper limit of the additional expense rate is less than 25%.
Fifth, gradually liberalize the floating range of independent pricing coefficients.
Guide the industry to integrate "independent channel coefficient" and "independent underwriting coefficient" into "independent pricing coefficient".
Small and medium insurance companies
Positive response
According to the opinions on the comprehensive reform of auto insurance, the phased goal is to achieve "price reduction, insurance increase, and quality improvement". It is worth noting that many property insurance companies in my country are operating at a loss in auto insurance business. In the context of further reforms, It will be more difficult to operate.
In the face of auto insurance reform, what do small and medium insurance companies think?
Shi Hui, general manager of Dajia Property & Casualty Insurance, previously stated in an interview with a reporter from the Securities Daily that the comprehensive auto insurance reform will inevitably have a greater impact on the market and the cost structure of insurance companies’ auto insurance operations, testing the actuarial pricing, risk control, and cost accounting of insurance companies. ability.
It will have a greater impact on companies with extensive operations and poor management capabilities.
Although the comprehensive reform of auto insurance is in pain, it will eventually promote the transformation of insurance companies' operations from sales and product-centric to customer-centric.
Insurance companies must fully predict the changes in the cost structure caused by changes in risks and consideration premiums, and actively think about countermeasures in terms of business management models.
The relevant person in charge of Zhongcheng Automobile Insurance Co., Ltd. said in an interview with a reporter from the Securities Daily that after the reform, the benchmark premium price of commercial auto insurance will drop significantly, and it is expected that the actual insurance premiums of consumers will also drop significantly; the range of compensation records will be reduced from the first one. The year was expanded to the first three years, and the rate of increase for accidental compensation consumers was reduced.
At the same time, the access method for auto insurance demonstration products has been changed from an approval system to a filing system to support small and medium property insurance companies to prioritize the development of differentiated innovative products, which will benefit insurance companies with specialized operations.
Cheng Hua (pseudonym), the person in charge of a medium-sized property and casualty insurance company, said frankly to a reporter from the Securities Daily: "If you ask whether the insurance company is ready for the comprehensive reform of auto insurance, everyone will say that it is not ready. But the reform cannot wait. It should come. The most important thing is to find a way to deal with it.” He said that for their company, auto insurance product innovation is not an easy task. In the case of increasing the loss ratio, it will choose to reduce the expense ratio to strive for the underwriting business. Loss or less loss.
Some insurance companies also said that they still want to seize the market in the initial stage, and the sales expense investment will not be greatly reduced. They must comprehensively measure the operating effect, such as underwriting losses but can get a larger premium income, and investment income can be used to make up for losses.
On the whole, insurance companies agreed that this comprehensive reform of auto insurance will bring greater challenges and must vigorously improve a series of comprehensive competitiveness such as pricing capabilities and product innovation capabilities.
Inevitable initial pains
Gradually return to reason
Regarding the comprehensive reform of auto insurance, some consumers said that it is indeed beneficial to consumers from the perspective of reform orientation, but it is often said that you get what you pay for, and they hope that the quality of service will not be reduced after the reform and price reduction.
Industry analysts believe that the reform will inevitably bring pains. In the early stage, there may be a phenomenon that "the loss ratio will inevitably rise and the channel costs may not decrease." However, after a period of multi-party game, the market will gradually return to rationality.
Li Shitong, co-founder of Best Lawyers, told a reporter from the Securities Daily that, overall, reforms pose greater challenges to insurance companies.
According to the reform plan, the industry's compulsory traffic insurance underwriting may once again fall into a situation of full loss, and the comprehensive cost ratio of small and medium insurance companies will further rise.
At the same time, because the auto insurance market is a fully competitive market, and intermediary channels such as 4S stores occupy a large sales market share, it is expected that in the early reform period, in order for various insurance companies to compete for the market, channel sales expenses will not drop significantly.
However, after a period of gaming, insurers will comprehensively consider the overall operating situation to avoid the result of "doing more and more losses". At that time, reducing channel costs will become an inevitable choice.
In addition to the challenges brought about by the comprehensive reform of auto insurance, Li Shitong believes that small and medium insurance companies also have opportunities for innovation.
The reform proposes that the access method of auto insurance demonstration products will be changed from the approval system to the filing system, and support small and medium property insurance companies to give priority to the development of differentiated innovative products. Small and medium insurance companies can consider cooperating with auto OEMs or special channels to jointly develop products, Provide services and share risks together, "Only in this way can we blaze a small and beautiful path."
(Securities Daily)
Our reporter Leng Cuihua