The commercialization of commercial auto insurance rates brewing over the past two years has finally progressed. The China Insurance Regulatory Commission once again adjusted the principles of auto insurance reform, saying that the ultimate goal is to allow insurers to have independent pricing power.
Although China Insurance Regulatory Commission did not explicitly set a timetable for the reform of auto insurance rates, many insiders told Nandu reporters that from the standpoint of monitoring, the auto insurance fee reform is likely to start in the second half of the year, and the new auto insurance rates are very likely. It will be implemented from next year.
The reform of auto insurance rates can be said to be “initiative†and will not only affect insurance companies, but also involve 4S stores, maintenance agencies and every owner. At present, all property insurance companies are actively preparing.
Why change? Most of auto insurance underwriting loss
At the beginning of May, after the Insurance Regulatory Commission once again solicited opinions on the reform of the commercial auto insurance clause rate management system, at the 25th National Motor Vehicle Insurer Joint Meeting held by the China Insurance Association on June 26, the Vice Chairman of the CIRC of the China Insurance Regulatory Commission Chen Wenhui on the principles of commercial auto insurance reform. Then set the tone.
Chen Wenhui said that the commercial auto insurance reform must adhere to the direction of marketization, handing over the right to formulate commercial auto insurance clauses to insurance companies, and giving the right to choose commercial auto insurance products and services to the market.
The China Insurance Regulatory Commission’s resolute promotion of commercial auto insurance reforms has a lot to do with the loss of insurance companies currently operating auto insurance business.
According to the current annual insurance report, except for PICC, Ping An, and Pacific Insurance, 44 non-listed insurance companies operating the auto insurance business did not survive the 2013 auto insurance underwriting loss.
A general manager of a general insurance company in Guangdong said to reporters that there are two main reasons that lead to the decline in the profits of insurance companies’ auto insurance business and even to large-scale losses. One is that major insurance companies fight for 4S shops, insurance brokerage companies, etc. Channels, paid two to three percent or even higher fees. The second reason is that since 2013, more than 60 manufacturers have adjusted their spare parts prices by more than 170 times. As a result, maintenance prices have risen and the cost of claims has risen. This dismal reality reflects the bottleneck period in the domestic auto insurance market. It will also force the acceleration of the marketization of auto insurance rates and the transformation of business models.
Auto insurance pricing by models
In terms of rates, Chen Wenhui pointed out that it should be market-oriented, giving and gradually expanding the insurance company's commercial auto insurance rates to develop autonomy. The most important thing is that Chen Wenhui made clear at the meeting the important direction of the auto insurance reform plan, that is, the pricing model was adjusted to model pricing. After the reform, "car damage insurance" will be based on different models for differential pricing.
The consensus reached by some property insurers is that part of Japanese cars imported from Europe and the United States have higher overall ratio, coefficient of risk, and loss ratio. If auto insurance rates are based on model pricing, the zero-to-total ratio of different models will affect the pricing of vehicle damage insurance. The higher the zero-to-zero ratio, the higher the compensation cost and the higher the corresponding premium.
Close to the China Insurance Regulatory Commission revealed that "at the beginning of the reform, according to the principle that the level of premiums will remain the same, the industry benchmark pure risk rate table will be converted into a specific model vehicle search rate, and the industry model database will be unified. In the later period of reform, with the accumulation of data and With the continuous advancement of actuarial work, the model-based pure risk rate table will gradually close to the actual level of risk for each model."
Ma Ning, an analyst at Beijing Gao Hua Securities, told Nandu that the marketization process will be carried out in phases. It is expected that in the early stage, CIRC will set a new benchmark rate for vehicle damage insurance, and at the same time, pricing in other parts, such as selectivity The purchase of third party liability insurance, stolen emergency insurance and other issues to give qualified insurers greater autonomy. The current vehicle damage insurance benchmark rate is based on the purchase price, and may be based on the model in the future.
Intensified auto insurance competition
The industry is really looking forward to the market-oriented reform of auto insurance rates, especially for some small and medium-sized companies, and they hope that the reform will bring them more development opportunities. Big companies also hope that the market-oriented reform of auto insurance can give them "looseness" and give them more flexibility.
“The auto insurance rate reform may cause some insurance companies to have a comprehensive cost ratio of more than 100%.†An insurance analyst pointed out that using PICC P&C Insurance, Ping An Property & Casualty Insurance and Pacific Insurance, for example, their respective profit levels reached historical highs in 2011. Since then, the overall cost ratio has soared.
Moody's Senior Credit Rating Director Yan Yimin pointed out that commercial vehicle insurance accounts for 60%-70% of the property insurance premium income, and the market-oriented rate reform has a large impact on the industry, which may cause the underwriting profit to decline, the expense rate to rise, and will reduce the profitability of the industry. And increase competition.
A market manager of Tianping P&C Insurance believes that since PICC, Ping An and CPIC have already occupied 70% of the auto insurance market, they have a certain advantage in the process of marketization of auto insurance fees, and small and medium-sized companies with weak profitability will Faced with a further shrinking market share. For the current relatively stable market pattern, the driving force for the price war is not much. Professor Gu Guozhu of the Department of Insurance at Capital University of Economics and Trade also stated that if supervision is fully liberalized, those companies that lack resistance will be eliminated. This has the advantage of enabling well-capitalized, well-managed companies to dominate the market.
However, Beijing Gao Hua Securities analyst Manin believes that the short-term impact of the reform on the industry may be more moderate.
4S shop profit model or end
In April of this year, the “Zero-Comparison†report of the automobile jointly issued by the China Insurance Association and the China Association of Automobile Maintenance Industry was considered by the industry as a reform of auto insurance rates.
The so-called "zero-to-none ratio" of automobiles refers to the ratio of spare parts to the sales price of whole vehicles, that is, the ratio of the total price of all parts of vehicles on the market to the sales price of whole vehicles. In general terms, if the total price of a vehicle model that separately purchases all parts and components of a vehicle is 300,000 yuan, and the vehicle’s price for this model is 100,000 yuan, the "zero ratio" of the model is 3:1. That is 300%. The higher the "zero-to-zero ratio" coefficient, the more expensive the spare parts are.
According to data from the China Insurance Regulatory Commission, at present, China’s insurance company auto insurance claims, up to nearly 72% for the replacement of automotive parts. After the auto insurance rate is marketed, the “zero-to-full ratio†of different models will become the basis for auto insurance pricing, rather than the current purchase price of new vehicles. In other words, if the new car price is similar to the two cars, if the "zero-to-all ratio" is very different, the basic premium will be very different.
For consumers, it is important to pay close attention to the basic premium of the car before buying a car. If you purchase a model with a high basic premium, no matter how good your driving habits are, you have to bear the high premiums that the car itself brings.
According to industry sources, after the market-oriented reform of auto insurance rates, not only could the 4S shop profit model be truly terminated, but also it will fundamentally motivate and promote auto manufacturers to pay attention to the entire vehicle maintenance, and auto repair industry chain participants to Auto Parts. Cost price, the remodeling and reflection of the supply chain system.
More risk, premium or high
This auto insurance rate reform has an important direction, that is, the human factor will also become an important factor affecting the auto insurance rate. The car's insurance claim record and the vehicle's illegal record will become important indicators. Ruan Guozhu believes that linking the price of auto insurance with illegal activities will be the trend of the times.
The general manager of the above-mentioned property insurance company said: "In fact, the general idea of ​​the rate marketization is very simple, that is, according to the quality of customers to price, the less risky customers will be cheaper, and the more premium customers will be more expensive."
“In the current auto insurance rate standard, individual traffic violation records have been listed as one of the decisive factors. However, the insurance company has not yet shared data with the traffic police system. In the future, with the tariff reform, illegal records and auto insurance costs will definitely be linked. Become a fact," said the market manager of Tianping P&C said.
“Customers with good driving habits are actually the most desirable customers welcomed by insurance companies. The premiums they pay are almost purely profitable to the company. After fee changes, such customers are likely to receive more favorable prices from the company. For customers who are often in danger, premiums will surely increase, and it is not ruled out that there will be extremely high premiums,†said an insurance broker in Guangzhou who declined to be named.
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