(TMTPOST)—Since the delivery of the Xiaomi SU7, a standout in the automotive market, to its initial batch of owners last week, discussions around its insurance premiums have become heated.
Initial reports suggest that the first-year premium for Xiaomi's car insurance ranges from 6,000 to 8,000 yuan (US$ 829-1,105). People’s opinions vary, with some deeming the premiums reasonable while others express frustration over the generally high costs associated with insuring new energy vehicles (NEV).
In recent years, the hefty insurance expenses for NEV have been a frequent topic of discussion. Many car owners have voiced concerns over substantial premium hikes during insurance purchases, with some even facing coverage denials. Statistics shows that the average premium per new energy vehicle in 2023 was around 4,000 yuan, nearly double the 2,200 yuan average for gas-powered vehicle insurance. What factors contribute to these high premiums, and is there hope for a decrease in the future?
Indeed, insuring new energy vehicles comes with a hefty price tag. A snapshot shared by a netizen revealed that the premium for Xiaomi's high-end SU7 MAX, including compulsory insurance, exceeds 8,000 yuan, with auto insurance alone surpassing 6,700 yuan. In response, some users noted that these fees rival those for fuel cars worth over 500,000 yuan.
Xiaomi EV responded to concerns regarding SU7 insurance costs, highlighting differences in auto insurance terms between new energy and fuel vehicles. These exclusive clauses provide comprehensive protection for NEV and cover various usage scenarios like driving, parking, charging, and operations. Moreover, premiums are calculated based on multiple factors beyond just vehicle prices, making direct comparisons misleading.
Insurance companies, on their part, attribute high premiums to elevated accident rates and claim ratios for new energy vehicles. Executives have pointed out several reasons contributing to the high costs. New energy vehicles boast sophisticated integration of intelligent systems, driving up maintenance costs significantly. Equipped with numerous sensors and devices, these vehicles incur higher repair expenses, especially due to the low sales volume of certain models, making parts production costly.
Besides, the unique body structure of new energy vehicles, particularly the vulnerable placement of power batteries, poses a higher risk of damage, including fire hazards, in the event of collisions. Moreover, differences in driving behavior between new energy and fuel vehicles contribute to higher accident probabilities, especially considering the prevalence of novice drivers among new energy vehicle owners.
Despite these challenges, the future of new energy vehicle insurance appears promising. With the market size of these vehicles expanding rapidly, insurance companies are expected to achieve economies of scale, potentially leading to a decrease in premiums.
The new energy vehicle insurance market presents ample opportunities for growth. By 2030, it is projected to reach a scale of 1.3 trillion yuan, comprising approximately 31.3% of total vehicle insurance premiums, according to a Deloitte China report.
However, insurance companies currently face losses in this sector. Data from major insurers indicates that while premium incomes from new energy vehicle insurance have surged, profitability remains a challenge. High comprehensive cost ratios, exceeding 100% in some cases, underscore the industry's struggle to achieve profitability.
Efforts are underway to reform and optimize insurance practices for new energy vehicles. Regulatory bodies aim to refine pricing mechanisms to make insurance more affordable, thereby encouraging broader adoption of new energy vehicles.
Car manufacturers are also stepping into the insurance industry, aiming to mitigate excessively high premiums. BYD's acquisition of Yi'an Property Insurance and Xiaomi EV's foray into automotive finance signal industry-wide efforts to address insurance cost concerns.
Additionally, advancements in data analytics and a shift towards dynamic scoring mechanisms based on driving behavior promise to deliver more personalized and cost-effective insurance services for new energy vehicle owners.
While challenges persist, if both the accident rate and the claims ratio decrease, there is hope for a reduction in insurance premiums for NEVs.