Insurers warn repairs and auto design raising costs of some EVs

Some new energy vehicle owners in China are facing higher insurance renewal premiums and repair cost pressures, highlighting the need for automakers, insurers and repair service providers to work more closely as the country's NEV market matures.

The issue does not mean NEV insurance premiums are rising across the board. Rather, premiums are becoming more differentiated among vehicle models and users, reflecting differences in repair costs, loss ratios and vehicle use.

The differentiation comes as the NEV insurance market expands rapidly but still faces claims pressure. Data from the China Association of Actuaries showed that insurers underwrote 43.58 million NEVs in 2025, up 40.1 percent year-on-year. Premium income from NEV insurance reached 190 billion yuan ($26.4 billion), while the sector still posted an underwriting loss of 5.6 billion yuan.

The data also showed that 143 NEV model series recorded loss ratios above 100 percent, meaning claims alone exceeded premiums, even before insurers counted their operating costs.

Zhang Xiaolei, secretary-general of the China Association of Actuaries, said the average per-vehicle risk cost of NEV insurance is about 2.2 times that of gasoline vehicles, while premiums are only about 1.7 times those of gasoline vehicles.

The gap helps explain why pricing is becoming more differentiated, as insurers give greater weight to repair costs, loss ratios and vehicle use when setting premiums.

High repair costs are a major factor behind the pricing pressure. Compared with gasoline vehicles, NEVs rely more heavily on batteries, electric motors, electronic control systems and smart-driving components.

Xie Yuantao, dean of the School of Insurance and Economics at the University of International Business and Economics, said repair costs for some NEVs are pushed up by limited access to key replacement parts and authorized repair channels.

Xie said integrated die-casting technology can also raise repair costs, as even minor damage may require replacing a large integrated component. Sensors such as lidar and millimeter-wave radar may need to be recalibrated after being replaced, adding to repair costs.

Vehicle use is another factor shaping premiums. NEVs used for ride-hailing, logistics and other high-intensity operations usually have higher mileages and higher risk exposure than private passenger cars. If insurers cannot accurately identify how a vehicle is used, risks from high-frequency operations may be reflected in pricing for similar models or user groups.

Addressing these pressures requires closer coordination among automakers, insurers and repair service providers. Sharing vehicle risk and repair data in compliance with regulations can help insurers set premiums more accurately, while feedback from insurers on high-loss models can help automakers improve safety design and repairability.

Policy measures have also sought to address these issues. A national guideline issued in January 2025 by four central departments, including the National Financial Regulatory Administration and the Ministry of Industry and Information Technology, called for efforts to reduce NEV repair and ownership costs, broaden supply channels for replacement parts and improve repair and claims standards.

It also encouraged automakers and power battery companies to improve battery repairability and support the sale of battery, electric motor and electronic control system components through self-operated or authorized networks.

Local authorities in Shenzhen, Guangdong province, have also introduced measures to address similar issues. The measures, issued on June 5 by the Shenzhen office of the National Financial Regulatory Administration and local industry, transport and commerce authorities, encourage insurers and NEV makers to strengthen technical exchanges, explore shared repair networks, and develop more standardized repair pricing and claims standards.

The measures also support automakers and power battery companies in improving the repairability of power batteries and expanding the supply of key replacement parts.

wangyuchen@chinadaily.com.cn