Seven major changes in the comprehensive reform plan for auto insurance, the maximum compensation for strong insurance is 200,000.
China Banking and Insurance Regulatory Commission recently issued "Guiding Opinions on Implementing Comprehensive Auto Insurance Reform (Draft for Comment)" (hereinafter referred to as "Draft for Comment"), which officially opened the comprehensive auto insurance reform. How to change it? China Banking and Insurance Regulatory Commission revealed that for consumers, in the case of expanding insurance liability and increasing the amount of protection, the premium expenditure will be significantly reduced; However, for property insurance companies, industry underwriting losses may occur in a certain period after the reform, and at the same time, market players will intensify differentiation, and small and medium-sized property insurance companies may have operational difficulties.
According to the data of China Banking and Insurance Regulatory Commission, the original premium income of auto insurance reached 818.8 billion yuan in 2019, accounting for over 60% of the total premium income of the industry, and it is still the main type of insurance in the property insurance industry.
Text/Guangzhou Daily All-Media Reporter Liu Ranran
The core of reform:
Consumer premiums will drop significantly.
China Banking and Insurance Regulatory Commission disclosed that giving full play to the decisive role of the market in the allocation of auto insurance resources is the focus of this reform, and many new adjustments are also carried out around this goal. For example, the "Exposure Draft" gives specific standards for the range of rate adjustment coefficients directly related to premiums. It is mentioned that it is a key step to combine the "independent channel coefficient" and "independent underwriting coefficient" into an "independent pricing coefficient".
In order to prevent the market from ups and downs and disorderly competition, the regulatory authorities decided to take this reform in two steps. The first step is to set the range of independent pricing coefficient at 0.65~1.35, and the second step is to fully liberalize it according to the progress of the reform. At the same time, in the initial stage of the comprehensive reform, the upper limit of the "independent pricing coefficient" of new cars will be temporarily tightened.
In this regard, the person in charge of the relevant departments in China Banking and Insurance Regulatory Commission said: "After the reform, the benchmark premium price of commercial auto insurance will drop sharply, and it is expected that the actual signing premium of consumers will also drop significantly."
China Banking and Insurance Regulatory Commission responded:
Consumers, insurance institutions and regulatory authorities all benefit.
China Banking and Insurance Regulatory Commission predicted that the comprehensive reform of auto insurance will have an impact on all aspects of the market: for consumers, with the expansion of insurance liability and the increase of insurance amount, the premium expenditure will be significantly reduced, which will undoubtedly benefit from the reform.
For property insurance companies, although the premium scale has declined, the increase in insurance coverage, the increase in insurance coverage, the growth of new cars and the improvement of grades will also be hedged; As the price of auto insurance returns to a reasonable level, the phenomenon of taking expenses by various illegal means will be significantly reduced, which can reduce leakage and tax expenditure, reduce compliance risks and improve the image of the industry.
For intermediary channels, the reform is conducive to obtaining legal and reasonable intermediary income, standardizing financial business management and reducing the risk of violation of laws and regulations.
For supervision, the comprehensive and smooth implementation of the reform will help solve the long-standing illegal problems in the auto insurance market and promote the optimization of supervision resources allocation.
A few consumers are more expensive to insure.
Small and medium-sized property insurance companies have operational difficulties.
What new situations may appear in this comprehensive reform of auto insurance? How to treat these changes and even challenges? China Banking and Insurance Regulatory Commission responded that there may be four new situations after the reform.
The first is the possibility that the scale of premium may decline. This reform not only recalculates the benchmark pure risk premium according to the actual risk, but also reduces the predetermined additional fee rate to 25%. After the reform, the benchmark premium price of commercial auto insurance will drop significantly, and it is expected that the actual signing premium of consumers will also drop significantly, and the overall auto insurance premium scale of the industry may decline to a certain extent.
Secondly, within a certain period after the reform, there may be industry underwriting losses. Due to the great efforts of this reform, there are more decentralization and decentralization. If the market players are not rational enough and the supporting regulatory measures can’t keep up, there may be a phenomenon of "chaos once released" in the short term, which will lead to industry underwriting losses and even affect the quality of claims service. Relevant supporting measures are considered in the Guiding Opinions. If measures such as promoting rational operation of market participants and standardizing market order are put in place, the risk of industrial underwriting losses should be effectively prevented.
Third, there may be operational difficulties for small and medium-sized property insurance companies after the reform. With the promotion of market-oriented competition, the phenomenon of "the strong will always be strong" is becoming increasingly obvious in many industries. The same is true of the property insurance market. Small and medium-sized companies are at a disadvantage as a whole and it is generally difficult to operate. It is expected that after the reform, market players will be more divided, and it will be more difficult for some small and medium-sized companies with weak competitiveness to operate, but this is a normal phenomenon of survival of the fittest under the market mechanism and is also conducive to forcing their professional transformation. At the same time, the Guiding Opinions put forward corresponding support policies. Including: supporting small and medium-sized property insurance companies to give priority to the development of differentiated, specialized and characteristic innovative products, giving more relaxed additional fee rates and other regulatory policies, and appropriately reducing the solvency regulatory requirements.
Finally, this reform recalculated the benchmark pure risk premium according to the actual risk situation, and there may be a few consumers who will see the premium price increase.
Seven major changes
1. The limit of compulsory insurance is raised to 200,000.
Increase the total liability limit for compulsory insurance from 122,000 yuan to 200,000 yuan, including the death and disability compensation limit from 110,000 yuan to 180,000 yuan, the medical expenses compensation limit from 10,000 yuan to 18,000 yuan, and the property loss compensation limit remains unchanged at 0.2 million yuan.
The liability compensation limit is adjusted according to the same proportion, in which the death and disability compensation limit is increased from 11,000 yuan to 18,000 yuan, the medical expenses compensation limit is increased from 1000 yuan to 1,800 yuan, and the property loss compensation limit remains unchanged in 100 yuan.
2. Three liability insurance can be up to 10 million.
Raise the liability limit of commercial three liability insurance from 50 thousand to 5 million yuan to 100 thousand to 10 million yuan. This promotion mainly takes into account the level of economic and social development and meets higher risk protection needs.
3. Seven items including broken glass are included in the insurance liability.
The main insurance clause of vehicle damage insurance adds seven aspects of insurance liability, namely, vehicle theft, glass breaking alone, spontaneous combustion, engine wading, excluding the odds, designating a repair shop, unable to find a third-party special agent, and supports the industry to develop additional insurance products such as wheel loss insurance and medical insurance external drug liability insurance.
The reporter interviewed people in the insurance industry and learned that the seven insurance liabilities increased by the main insurance of car damage insurance belonged to seven additional risks in the past, and consumers can only obtain corresponding protection by insuring the corresponding additional risks. However, the Guiding Opinions put additional risks into the car damage insurance clause, which greatly improved the coverage of car damage insurance, especially in the case of engine wading and broken glass alone, which will be easier to deal with in the future.
4. Formulate auto insurance value-added service insurance clauses such as driving on behalf of others.
There are several clauses in the Draft for Comment, which support the industry to expand the scope of commercial auto insurance protection responsibility under the principle of basically not increasing consumer premium expenditure. For example, guide the industry to reasonably delete the exemption clauses that are likely to lead to claims disputes in practice, and reasonably delete the exemption agreements such as accident liability exemption rates and the inability to find third-party exemption rates.
Formulate model clauses for new energy auto insurance, accident insurance for drivers and passengers, and extended warranty insurance for motor vehicles, explore the development of innovative products such as motor vehicle mileage insurance (UBI) in new energy vehicles and qualified traditional vehicles, and formulate model clauses for auto insurance value-added service insurance including inspection, road rescue, driving service and safety inspection.
5. Consumers who have not paid compensation are more favorable.
On the basis of increasing the liability limit of compulsory insurance, combined with the comprehensive payout ratio level of compulsory insurance in various regions, the regional floating factor is introduced into the rate adjustment coefficient of road traffic accidents, and the upper limit of the floating rate remains unchanged at 30%, and the downward floating rate is expanded from the original lowest -30% to -50%, thus improving the preferential rate for consumers who have not paid compensation. This also means that the preferential rate for consumers who have not paid compensation is higher than before, which is a good thing for car owners with good driving behavior.
6. The upper limit of the handling fee ratio is lowered
The upper limit of the surcharge rate for commercial auto insurance products will be lowered from 35% to 25%, and payout ratio is expected to increase from 65% to 75%. Timely support property insurance companies to report and file commercial auto insurance products in online sales, electricity sales and other channels with the upper limit of additional expenses below 25%.
According to the actual risk situation in the market, the pure risk premium of commercial auto insurance industry is re-calculated, and a normalization mechanism for calculating the pure risk premium of commercial auto insurance industry adjusted every 2~3 years is established.
Guide the industry to expand the scope of payment records from the previous year to the first three years when drawing up the preferential coefficient of non-compensation for commercial auto insurance, and reduce the rate increase of accidental payment to consumers.
Guide the industry to reasonably set the upper limit of the handling fee ratio according to the upper limit of the additional fee rate of commercial auto insurance products, the actual market operation and the differences of market entities, and reduce the excessive handling fee level in some fields.
7. Implement auto insurance real-name registration system and promote electronic insurance policies.
On the basis of protecting consumers’ right to know and choose, property insurance companies are encouraged to provide consumers with more convenient auto insurance underwriting claims services through electronic insurance policies.
Property insurance companies should strengthen the identity verification of the insured, do a good job in policy signature, clause explanation and exemption explanation, promote real-name payment, promote information transparency, prevent misleading sales, advance premiums, and sign on behalf of consumers, and safeguard the legitimate rights and interests of consumers.
Strengthen the research on new technologies and applications such as car networking, new energy and autonomous driving, improve the operation efficiency of auto insurance, consolidate the service foundation of auto insurance, optimize the development environment of auto insurance, and promote the innovative development of auto insurance.
Case analysis
For example, the basic premium for car compulsory insurance for families with less than 6 seats is 950 yuan. At present, the industry stipulates that the maximum discount is 30%, and the maximum discount may be 50% after the reform, which can reduce the expenditure of 190 yuan.