China, Dec.29 – XPeng Inc.(NYSE: XPEV, HKEX: 9868.HK) announced its models face a 2.9-18.2 percent increase in insurance costs, based on feedback from major insurers on December 28.
In the last month of 2021, the Insurance Association of China (IAC) brought NEVs insurance, to all buyers of NEVs including electric vehicles, fuel cell vehicles, and plug-in hybrid electric vehicles.
According to netizens in China, insurance for Tesla model in China may be as high as 80%. Though fees differ on varying degrees, rates have risen between 16% and 50% for Xpeng, Nio and Li Auto.
Before the exclusive insurance for NEVs became available on December 27, the average insurance cost quoted by major insurers in major Chinese cities for the XPeng P5 was RMB 4,626, according to XPeng. After the exclusive insurance became available, that price was RMB 4,760, an increase of RMB 134, or 2.9 percent.
The average quote faced by the XPeng G3i SUV rose from RMB 4,066 to RMB 4,210, an increase of 3.5 percent. The XPeng P7 faced an average quote increase from RMB 5,600 to RMB 6,622, an increase of 18.2 percent, according to XPeng.
XPeng added quotes provided by different insurers in different regions may vary and consumers should be guided by the actual quotes they receive.
NEVs officially entered the era of exclusive insurance, for the underwriting of insurance companies, in new energy vehicles have not accumulated more insurance data, the company’s own pricing ability and moral hazard prevention ability are tested.
Some models of new energy vehicles are facing premium increases mainly because of the high payout rates of insurers.
Beijing Daily showed that the current average payout rate of new energy auto insurance is close to 85%, and the industry is facing greater pressure to underwrite losses.
Executives of several listed insurers have talked about the higher payout rates of new energy vehicles compared to traditional fuel vehicles at the 2021 interim results conference. Yu Ze, vice president of People’s Insurance CO Group of China, has said, “From the current situation, the payout rate of new energy vehicles is slightly higher than that of traditional fuel vehicles, mainly because the frequency of insurance is higher than that of traditional fuel vehicles, as new energy vehicles belong to the primary stage, and product performance varies greatly from one host manufacturer to another.”Yu Ze, vice president of People’s Insurance CO Group of China,
The person in charge of China Taibao said that before the launch of the new energy exclusive car insurance, new energy vehicles and fuel vehicles claims affairs lack of refined management rules and practises, insurance experience data deposit is not yet sufficient, in the short term, the rate of new energy vehicles and payout rate is still significantly higher than traditional fuel vehicles.
However, with the accumulation of exclusive products in the expanding market, claims technology will be rapidly iterated and upgraded, and refined management of underwriting pricing will push the payout rate of new energy vehicles back to a reasonable level in the long run.