Many owners of new energy vehicle (NEV) in Shanghai have claimed problems with insurance renewal because they are deemed “high risk” by insurance companies despite never having filed a claim. Why it is difficult to insure for NEVs? Should the corresponding insurance business be improved? Zheng Xin, associate professor from the Department of Marketing (under preparation), Tongji SEM, has recently been interviewed by a reporter from Jiefang Daily, in which he discussed the current status of NEV insurance products and offered suggestions for optimization. The published original text is as follows.

How can insurance for NEVs be more scientifically developed?

In 2023, the number of NEVs newly added in Shanghai reached 354,000 and the ownership reached 1.288 million, ranking first among global cities. It is unrealistic to impose a “one-size-fits-all” underwriting restriction on NEVs, and raising premiums arbitrarily will not appease consumers. On January 24, the Property and Casualty Insurance Supervision Department of the National Financial Regulatory Administration released the Notice on Doing an Effective Job in New Energy Vehicle Insurance Underwriting, which requires insurance companies to perform comprehensive inspection and rectification, refrain from imposing unreasonable restrictions on underwriting specific NEV models in terms of system control, underwriting policies, etc. and adjust unreasonable assessment targets for NEV insurance.

Zheng Xin told the reporter that although the ownership of NEVs has grown rapidly in the past two years, the insurance industry has only just begun to analyze the relevant data. Regarding the risk and probability of claims for NEVs on the market, no definitive decisions have been taken or resolved. Instead, the risk and probability are still assessed using the same reasoning that applies to conventional fuel vehicles, devoid of any scientific evidence. “The more unpredictable and unclear the risk, the higher the pricing.” Although some insurance companies are developing businesses similar to Usage-Based Insurance (UBI), they have no access to driving records provided by automakers and have not amassed enough data to provide the car owners with customized auto insurance products.

How to offer more scientific NEV insurance products? According to Zheng Xin, as battery damage accounts for a high proportion of compensation costs, many automakers and insurance companies are collaborating with colleges and universities to study battery usage data and launch new types of insurance for core components, such as battery insurance, thereby controlling claims risks and appropriately reducing premiums. “Now the entire industry should accelerate research and strive to overcome professional difficulties in the area of NEV insurance, in order to launch better products and services.”