Transfer: Beijing Business

The second phase of the vehicle accident is gradually rolled out! According to regulatory requirements, the most up-to-date commercial vehicle insurance self-pricing factors were introduced in all regions by the end of May, while the provincial capitals of Beijing, Tianjin and Foca had taken the lead on 28 April. Prior to the industry, it was projected that, with the adjustment of the Autonomy pricing factor for commercial vehicle insurance, the pricing of vehicle insurance will be further liberalized, the price of the “good owner” will be further reduced and the premium for high-risk motorists will increase further.

“The feeling is still more obvious, and my car accident was the lowest price offered by our friends, and it is not thought that it could be reduced again.” Mr. Littlea, the owner of the caravan in the town of Tang, North Province, will expire in June, and in recent days, he found that the business insurance premium of nearly 1,200 dollars last year was only 1,000 yuan this year.

According to the insurance policy information provided by Mr. Littlechild, the business insurance premium last year was $191.72, and this year the quotation retained fell to $1014.98, a 17 per cent reduction.

The reduction in insurance premiums for motorists has benefited both from their good driving habits, from their inaction and from policy dividends.

As early as the end of 2022, the Board issued the Notice on matters related to the further expansion of the scope of fluctuations in commercial vehicle insurance self-pricing factors (hereinafter referred to as the Notice) and further expanded the ownership of financial insurance companies in pricing by expanding the range of commercial auto-pricing factors. The Circular makes it clear that the range of fluctuations in the Autonomy pricing factor for commercial vehicle insurance has been expanded from [0.65, 1.35] to [0.5,1.5], which is referred to as “two-size-fits-all” in the industry.

At present, the cities of Beijing, Tianjin and Fukuoka were among the first new top-line rates on 28 April, while the remaining provinces and municipalities were in principle not later than 1 June.

The adjustment of the self-pricing factor has a direct impact on vehicle insurance premiums, calculated on the basis of the commercial vehicle insurance costing formula (commercial vehicle insurance premiums = base premiums x NCD factor x autonomous pricing factor), with an increase of up to 23 per cent and up to an increase of 11 per cent. Mr. Littlechild, who will be re-insured in June, has been able to catch up with this dividend.

The reform of the vehicle insurance has been a major contributor to civilian life, and the statistics of the Ministry of Public Security show that in 2022, the number of automobiles in the country was 319 million and that the number of motor vehicles has reached 4406 million.

The phase-out targets for “price, premiums, withdrawals” have been largely achieved as a result of the relocation of the vehicle insurance. According to the Board, as of June 2022, the average premiums for vehicles had declined by 21 per cent compared to the pre-reform period and 87 per cent of the consumer insurance expenditure had declined.

How, then, would this second round of car accidents affect the bags of the bus owners? First, only a small number of high-quality motorists are expected to receive lower discounts.

It is widely felt in the industry that, following the implementation of the Notice by insurance companies, this adjustment will result in more refined pricing of vehicle insurance, lower insurance premiums for well-conducted motorists and higher insurance premiums for “high-risk motorists”. However, the “trench price” is limited to lower space, and only a certain number of high-quality motorists are able to benefit from discounting.

“The large size of the vehicle accident is not realistic. At present, the profitability of the vehicle insurance is relatively small, the rate of insurance in the wake of the recovery of the economy and life is likely to rise, and insurance companies generally face considerable pressure, so market reactions should be at reduced rates.” The Deputy Director of the Rural Insurance Institute of the University of Economics and Trade of the Capital, Lee, stated that the adjustment was conducive to improved marketization mechanisms for rates, a decisive role for market mechanisms in the distribution of resources on the market for vehicle insurance, a better match between vehicle risks and rates and a dynamic market for vehicle insurance.

The Eastern Wu Securities ADB research team also indicated that this adjustment would result in more refined pricing of vehicle insurance and lower insurance premiums for motor-usual owners, although, in view of the fact that at present only less than 1 per cent of the bills are close to the pricing factor “board prices” (0.65), about 5 per cent of the bills are close to the “board” (1.35), it is expected that the average of the sector-owned pricing factor will remain stable and that the overall discount rate will be limited.

If the reduction from 0.65 to 0.5 is a preference for “goods”, from 1.35 to 1.5, it would facilitate the opening of a window for high-risk vehicles.

“It cannot simply be understood that this is a price reduction.” A financial venture company’s senior management told Beijing reporters that the auto-pricing factor was adjusted to allow insurance companies to better price and more real feedback on customer risks. At the same time, further increases in pricing ceilings for high-risk operations, such as refrigerators, buses, taxis, etc., would help to address the industrial difficulties in securing high-risk vehicles in some parts of the country.

However, in the current context, market responses are not imaginatively sensitive and quick. The businessman of an insurance broker responsible for the bus accident, Yango, told the Beijing reporters that the buses were still restricted in various insurance companies, that price changes were not significant, that the bulk vehicle would still need to be single-minded and that subsequent market changes would be observed.

The regulatory sector adjusts the range of floating auto-pricing factors for vehicle insurance to obtain tangible benefits for consumers, but has an impact or more profound effect on insurance companies.

“The pricing of insurance companies will be more precise and more capable of providing differentiated pricing and services to clients.” The above-mentioned financial insurance companies are highly regulated.

With regard to the future course of the bus risk market, H. Lee, the Chinese Securities Analyst, analysed in the relevant study, the expansion of the scope of the fluctuations in the vehicle pricing factor to equip insurance companies with the ability to adjust the vehicle risk discount factor, the expansion of the discount factor could lead to increased competition and, in the low cost rate age, the size, network advantages, data advantages and pricing advantages of large insurance companies were difficult to shrink at short notice.

In Lee, it was noted that further liberalization of the auto-pricing factor for vehicle insurance could be expected to further exacerbate competition in the market. As the vehicle insurance is a sizeable economic sector, those large and medium-sized insurance companies are more resilient to competition, and the future fragmentation of the market for vehicle insurance will be further exacerbated, with some small and medium-sized companies expected to expedite their exit from the market and further focus their operations on large and medium-sized insurance companies.

Médecins du Beijing

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