Cumulatively reduced spending for consumers by more than 190 billion yuan—

  The comprehensive reform of auto insurance has achieved great results

  Our reporter Yu Yong

  A few days ago, the China Banking and Insurance Regulatory Commission released the operating conditions of the insurance industry for the first October of 2021.

It is worth mentioning that in the first October of this year, the original insurance premium income of motor vehicle insurance was 625.5 billion yuan, a year-on-year decrease of 8.38%.

However, in October, the original premium income of auto insurance was 63.3 billion yuan, an increase of 2.26% year-on-year, and it stopped falling and rebounded.

Industry insiders predict that in accordance with the current development momentum, auto insurance premiums are expected to reverse the downward trend next year and achieve positive growth.

  In September 2020, the "Guiding Opinions on Implementing the Comprehensive Reform of Auto Insurance" was implemented nationwide.

At the press conference of the State Council Information Office held in October this year, Wang Chaodi, chief inspector of the China Banking and Insurance Regulatory Commission, director of the General Office, and spokesperson said that the comprehensive reform of auto insurance has reduced the expenditure of auto insurance consumers by more than 190 billion yuan. The phased goal of "guarantee and quality improvement" has basically been completed.

  Lower consumer spending

  Before the comprehensive reform of auto insurance, high handling fees and high expense ratios pushed up auto insurance prices, which in turn affected the profitability and product innovation of insurance companies.

This has also become an urgent problem in the field of auto insurance in recent years.

  According to data from the China Banking and Insurance Regulatory Commission, as of the end of October this year, the average premium paid by vehicles was 2,762 yuan, which was 21% lower than before the reform, and 87% of consumer premiums fell.

At the same time, the average non-compensation preferential treatment coefficient (NCD coefficient) of commercial auto insurance dropped from 0.789 before the reform to 0.753. Many low-risk car owners with good driving habits and low risk of insurance have enjoyed more premium discounts.

  The reporter learned during the interview that under the organization of the China Banking and Insurance Regulatory Commission, the insurance industry recalculated benchmark premiums, further optimized the NCD coefficient rules, and companies continued to improve premium pricing models.

Take PICC Property & Casualty Insurance as an example. In the first 10 months of this year, the average car premiums fell by 17.67% compared to the pre-reform period. Among them, the average car premiums for commercial insurance dropped by 22.21% from the pre-reform period.

  A vehicle driven by a consumer in Zhejiang has not been out of danger for five consecutive years, and the insurance premium has been around RMB 4500 for the past two years.

Unexpectedly, there was an accident at the beginning of this year. I was worried that the premium would increase sharply after the claim was settled. However, after receiving the quotation from PICC Property & Casualty Insurance, it was discovered that the premium had not increased but dropped to a certain extent.

This is due to the optimization of the NCD coefficient rules, so that the insured will not be unable to enjoy the discount due to accidental accidents, resulting in a substantial increase in insurance premiums.

  With the substantial reduction in vehicle insurance premiums, car owners' willingness to insure has increased significantly, and the comprehensiveness and adequacy of risk protection for various types of vehicles have been significantly improved.

Data from PICC P&C shows that the average amount of third-party liability insurance in 20 business areas has increased by more than 50%, and the phased goal of "increasing insurance" for the comprehensive reform of auto insurance has been initially achieved.

  In the first 10 months of this year, the insurance rate of auto commercial insurance increased to 89.18%; the insurance rate of auto damage insurance, tripartite insurance, and vehicle personnel insurance increased from 68.4%, 86.56%, and 53.72% before the reform to 69.96%, 88.49%, and 71.59, respectively. %; In terms of the adequacy of protection, the average insured amount of PICC P&C insurance and vehicle personnel insurance increased by 41.7% and 15.0% respectively.

  At the same time, the regulatory authorities have adopted policy measures to expand insurance liability and lower the level of additional expense rates, which has fundamentally reduced the expense space.

As of the end of October, the national auto insurance comprehensive expense ratio was 27.8%, a sharp drop of 12.5 percentage points year-on-year.

At the same time, local regulatory bureaus maintained a high-pressure situation, organized and implemented special inspections of auto insurance, and issued consecutive fines to insurance companies that violated regulations, effectively maintaining the stable development of the auto insurance market.

  Increased risk protection

  According to the relevant person in charge of the China Banking and Insurance Regulatory Commission, the amount of compulsory traffic insurance coverage has increased from 122,000 yuan in the past to 200,000 yuan under the condition that the price remains unchanged. The upper limit of commercial third party liability insurance has been expanded from 5 million yuan to 10 million yuan.

Data shows that on the basis of the substantial increase in the insurance coverage of compulsory traffic insurance, the average insurance coverage of commercial third-party liability insurance increased by 630,000 yuan to 1.52 million yuan, of which the proportion of insurance policies with an insurance value of 1 million yuan and above reached 93%.

Auto insurance plays an important role in giving play to the social governance function of insurance and promoting the improvement of road traffic safety management.

  In July of this year, many parts of Henan suffered heavy rain disasters.

Post-disaster claims settlement has become a "touchstone" for testing the effectiveness of the comprehensive reform of auto insurance.

  Before the comprehensive reform of auto insurance, the insurance rate of engine wading insurance as an additional insurance category was low, restricting the performance of related protection functions.

After the comprehensive reform of auto insurance, the engine water insurance is directly incorporated into the auto damage insurance liability, and there is no need to purchase it separately.

This reform directly benefits car owners who were damaged in the heavy rain disaster in Henan.

According to data from Henan Banking and Insurance Regulatory Bureau, 255,500 car damage insurance reports were reported during the torrential rain disaster, with an estimated loss of 7.354 billion yuan, of which 220,000 vehicles were insured after the comprehensive reform of auto insurance, accounting for about 87%.

According to preliminary calculations, 199,000 damaged car owners directly benefited from the main insurance expansion of this reform, involving 900 million yuan in compensation.

  The reporter learned during the interview that after the heavy rains in Henan, the insurance industry dispatched 6,240 rescuers, 3067 rescue vehicles, and rescued 148,000 disaster-stricken vehicles indiscriminately.

In terms of claims, PICC Property & Casualty, Ping An Property & Casualty, China Life Property & Casualty Insurance, and CPIC Property & Casualty Insurance have set up 433 insurance claims convenience service points in Zhengzhou City alone, established a “three simplified” list of claims settlement procedures, procedures, and standards, and launched "Three exemptions and all the time" services that exempt on-site surveys, exempt weather certificates, free rescue, and direct compensation to the store, refine the classification of flooded vehicles, adopt the same repair station to package and negotiate the damage, and the presumptive total loss of high-loss vehicles, etc. Measures to improve the efficiency of damage assessment.

As of December 1st, 7.141 billion yuan of compensation had been paid to 252,700 damaged car owners, and the progress of claims settlement exceeded 97%.

  A consumer in Zhengzhou City bought auto insurance in March this year. Compared with the policy before the comprehensive reform, not only the premium has dropped by 443 yuan, but the auto damage insurance protection is also more comprehensive.

In July, his vehicle was flooded after heavy rains. After receiving the report, CPIC P&C's claim settlement staff quickly investigated and settled the claim, verified the loss on the spot, entered the system, and paid the compensation.

According to statistics, it took 1 hour and 42 minutes from the report to the settlement of the claim, and the compensation was paid 1 minute after the settlement.

  Increased industry development momentum

  Extensive business model, inadequate innovation ability, low payout ratio... used to be the industry insiders' inherent impression of the auto insurance market.

After the comprehensive reform of auto insurance, the cost of insurance companies has been reduced, the overall compensation level of the industry has been continuously improved, and auto insurance protection can benefit consumers more.

As of the end of October, the comprehensive loss ratio for auto insurance was 73.1%, a year-on-year increase of 16.2 percentage points.

  At the same time, the reporter learned during the interview that various insurance companies have seen many positive changes in the research and development and sales of auto insurance products.

For example, in terms of risk pricing, large companies make full use of existing data to determine their own pricing models, while small and medium-sized companies cooperate with insurtech platforms to improve their own risk control levels.

In terms of expense management, on the one hand, insurance companies reduce their dependence on traditional sales channels and enhance their bargaining power; on the other hand, they improve their ability to control claims costs and improve efficiency and service levels.

It can be said that the competition in the field of auto insurance has gradually shifted from the original cost competition to the competition between services and technology.

  Taking PICC Property & Casualty Insurance as an example, in some areas, heavy-duty trucks rely on technological carriers such as the Internet of Things, face recognition, and anti-collision systems to implement risk reduction management and proactively prevent major accidents.

Judging from the data of the pilot areas, the heavy-duty trucks participating in the pilots are nearly 7 percentage points lower than the average compensation rate of the heavy-duty trucks in the province.

  In addition, after the comprehensive reform of auto insurance, insurance companies’ value-added services to customers are reflected in terms of clauses, and companies have increased service capacity building and resource input.

A number of value-added services such as inspection, road rescue, driving service, and safety inspection have almost become standard equipment of every company, and have been widely praised by consumers.

  The relevant person in charge of the China Banking and Insurance Regulatory Commission said that in the future, the market-oriented and risk-based auto insurance clause rate formation mechanism will be further improved, the price cost structure will be optimized, and the price of auto insurance will be more matched with risks.

At the same time, we will deepen the reform of “decentralization, regulation and service” for auto insurance, steadily liberalize access to front-end products and services, support differentiated product innovation, and enhance market vitality.

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