Oops...EV need more sexpensive insurance premium de woh....must driving like a Big Boss

[k1976]

CHINA’S rapid adoption of new-energy vehicles (NEVs) is posing a problem for many insurers in the country. They are losing money on insuring the vehicles, as strict pricing rules mean they cannot raise their premiums to the point of profitability. This is despite already charging far more to insure NEVs.

The SU7, Chinese tech giant Xiaomi’s debut NEV, retails for 215,900 yuan (S$39,873). However, getting it insured costs around the same as for a combustion-engine vehicle more than twice its price. This is more or less standard, as NEV owners are about twice as likely to file a claim, according to data provided by LexisNexis Risk Solutions.

 

[k1976]

Liu Shulin, president of the CIRI Auto Technology Institute, a research institute specialising in insurance-related car technology, cited several reasons for NEVs’ elevated risk probability in an April article.

One reason is that NEVs can accelerate significantly quicker than traditional cars. Liu pointed out that a Tesla Model 3 can hit 100 km per hour in just 4.4 seconds, nearly twice as fast as a similarly priced BMW combustion-powered car.

Another reason is that NEVs, particularly their batteries, are expensive to repair. Some NEVs can only be repaired by their manufacturers instead of general auto repair shops, pushing up costs.

Liu also cited the widespread adoption of NEVs in the ride-hailing industry – which means they are being driven far further per year, piling on extra risk and wear.

Some NEV owners are finding that they’re simply judged to be too risky to insure. Some road-tripping NEV drivers have complained that they could not renew insurance policies on their NEVs because their vehicles covered more than 20,000 km in the previous year. That works out to an average of more than 54 km per day.

 

[k1976]

China’s number of insured NEVs soared from around seven million in 2021 to over 20 million in 2023, with their total premiums skyrocketing from more than 30 billion yuan to almost 100 billion yuan.

Despite this, insurers are usually losing money when they insure NEVs. Their loss ratio – which measures the ratio of losses, including paid claims and other related expenses, compared with premiums earned – is higher than for traditional vehicles. NEVs’ combined ratio, which is calculated by adding an insured item’s loss ratio and expense ratio, is usually higher than 100 per cent.

The higher the reading, the less profitable insuring an item becomes. A reading above 100 per cent means that the insurer that offers the policy will lose money on it. The expense ratio includes the insurer’s operating costs, such as management expenses and marketing costs.

The combined ratio for household NEVs normally stands between 105 and 110 per cent, and that for ride-hailing NEVs is roughly between 120 and 130 per cent, according to a source who works in car insurance at a midsize property insurance company.

The reading is much higher for new-energy trucks, usually between 140 and 150 per cent but can go up to above 200 per cent, the source said.