New energy vehicle insurance pricing coefficient adjusted again; exploring the "vehicle and battery separation" model

Jingjing Chen, a reporter from China Economic News, Beijing

New energy vehicle insurance is undergoing a profound transformation.

Recently, the insurance industry’s autonomous pricing coefficient for new energy vehicle insurance has entered a new round of optimization and adjustment, expanding the range from [0.6, 1.4] to [0.55, 1.45]. This is the second change since September 2025.

Regulatory data show that in 2025, the premium scale for new energy vehicle insurance is expected to reach RMB 200 billion, with a growth rate of over 30%.

At the same time, the industry is also continuously exploring innovation in new energy vehicle insurance, namely the “vehicle–electric separation” model. Because it breaks the traditional framework of “one vehicle, one policy,” this model raises entirely new requirements for how insurance responsibility for batteries is divided, how risk is attributed, and how claims are processed, helping insurance companies solve the “high payout, high cost” challenge.

Industry insiders told a reporter from China Business News that the deepening of autonomous pricing coefficients and the widespread adoption of the “vehicle–electric separation” model will jointly drive the rapid evolution of new energy vehicle insurance from “extensive pricing” to “precise risk matching.” Insurance companies are actively coordinating with all parties to build an insurance service system suited to new business models, and will also fundamentally reshape the ecosystem of new energy vehicle insurance.

Step-by-step advancement of reform

The autonomous pricing coefficient for auto insurance refers to the floating coefficient used by insurance companies when calculating commercial auto insurance premiums. It is adjusted based on factors such as the vehicle’s risk and the policyholder’s driving record, directly affecting whether consumers’ premiums are high or low. Generally speaking, the better the driving habits and the lower the accident rate of “good drivers,” the lower the autonomous pricing coefficient, and the cheaper the premium. Conversely, the premium is higher.

In January last year, the National Financial Regulatory Administration, the Ministry of Industry and Information Technology, the Ministry of Transport, and the Ministry of Commerce jointly issued the Guiding Opinions on Further Deepening Reform, Strengthening Regulation, and Promoting High-Quality Development of New Energy Vehicle Insurance (hereinafter referred to as the Guiding Opinions). It clearly states that it will optimize insurance pricing standards for new vehicle models, comprehensively consider factors including the new vehicle’s price, driving range, power performance, safety configuration, and vehicle risk tiering, and improve pricing precision and reasonableness.

Recently, the autonomous pricing coefficient range for new energy vehicle insurance expanded from [0.6, 1.4] to [0.55, 1.45], and is already implemented nationwide.

For consumers, after this round of adjustments to autonomous pricing coefficients, will auto insurance premiums rise or fall?

According to the formula for calculating commercial auto insurance premiums: commercial auto insurance premium = base premium × no-claim discount (NCD) coefficient × autonomous pricing coefficient. In theory, after the adjustment, the maximum premium price for auto insurance can decrease by 8.33%, i.e., (0.55-0.6)/0.6 = -8.33%. The increase works similarly: (1.45-1.4)/1.4 = 3.57%. It should be noted that the above refers to the theoretical floating range; actual premium changes are affected by other factors.

Executives in charge of auto insurance at multiple property and casualty insurance companies told reporters that after this adjustment to the autonomous pricing coefficient, the continuing expansion of insurance companies’ pricing discretion allows them to dynamically adjust the average premium for new energy commercial insurance policies, making premiums match risks more closely and resulting in pricing that is fairer and more reasonable. The price of ordinary new energy vehicle insurance will not change much compared with before. However, for models with higher accident rates, their premiums may see a small increase.

A research report released by Xu Kang’s team in the Financial Services division at Huachuang Securities analyzed that: “From a theoretical perspective, higher payouts should push pricing upward, i.e., achieving sufficiently priced risks. But for a long time, due to constraints on the autonomous pricing coefficient range, new energy vehicles—especially certain high-risk models—have been clearly underpriced. By opening up 0.05 of pricing space this time, it may help improve the degree of sufficiently priced risks, and partially ease the operating pressure faced by insurers in the management of new energy vehicle insurance.”

The difficulties facing new energy vehicle insurance are not only related to pricing coefficients, but also involve systemic challenges across multiple dimensions, including product forms, risk assessment, and technological change. At present, most property and casualty insurers face payout pressure in new energy vehicle insurance and generally operate at a loss, with only leading companies possibly able to achieve underwriting profit in passenger car business.

During the two sessions this year, Zhou Yanfuang, director of the Strategic Research Center (ESG Office) of China Pacific Insurance (Group) Co., Ltd., a National People’s Congress deputy, told reporters that the risk characteristics of new energy vehicles are fundamentally different from those of gasoline vehicles, making traditional underwriting and claims models difficult to adapt effectively. For example, battery purchase costs are high, and faults in motors and electronic control systems are highly concealed. As the number of new energy vehicles in operation continues to grow and gradually ages, the risks of the “three electrics” system will become concentrated and create long-term pressure on vehicle insurance payouts.

In addition, some household new energy vehicles are used for commercial operations such as online ride-hailing, but they are still insured at household vehicle rates when underwriting, leading to a mismatch between risk and premiums and further increasing the difficulty of operating vehicle insurance.

“In terms of the pricing mechanism, it is recommended to implement risk-tiered regulatory supervision, guide the industry to enrich the supply of value-added services for lower-risk household vehicles, and explore dynamic pricing modes based on driving behavior. For higher-risk commercial vehicles, we should promote the establishment of risk pricing models linked to indicators such as mileage, usage intensity, and battery health.” Zhou Yanfuang said.

Innovate with the “vehicle–electric separation” model

Faced with the dual problems of new energy vehicle insurance—vehicle owners complaining that premiums are too expensive, and insurers operating at losses—the industry has started to explore the “vehicle–electric separation” model for new energy vehicle insurance.

According to publicly available information, under the “vehicle–electric separation” model for auto insurance, the vehicle body and battery insurance responsibilities are split: the insurance for the vehicle body remains consistent with traditional comprehensive coverage for gasoline vehicles, while the battery is insured in a unified manner by the supplier, covering risks such as battery degradation and damage.

At the end of February this year, Shenzhen’s Local Financial Regulatory Administration, the Shenzhen regulatory bureau of the National Financial Regulatory Administration, the Shenzhen Municipal Science and Technology Innovation Bureau, and the Shenzhen Municipal Bureau of Industry and Information Technology jointly released the Action Plan of Shenzhen for Insurance Industry Support for Science and Technology Innovation and Industrial Development (2026–2028). The plan proposes optimizing the supply of new energy vehicle insurance and studying the launch of a “basic + variable” new energy vehicle insurance product combination. It encourages insurance institutions to actively align with the trend of intelligent driving, strengthen data cooperation with intelligent driving developers, manufacturers, and operators, accumulate risk analysis data, and refine the supply of insurance products for intelligent driving vehicles. In the fields of urban transportation and other specific scenarios, it explores the development of commercial auto insurance products based on the “vehicle–electric separation” model.

Sunshine Property & Casualty Insurance Co., Ltd.’s Shenzhen Branch publicly stated that the “vehicle–electric separation” model is viewed by the industry as a key innovative path to systematically resolve the core contradiction in new energy vehicle insurance—vehicle owners’ “anxiety about preserving value” and insurers’ “complexity in loss assessment.” It aims to achieve precise matching between assets and risks by clarifying the risk subjects, and to provide the market with more scientific insurance solutions.

At present, in some regions, the “vehicle–electric separation” underwriting pilot has already been launched and has shown initial effectiveness. For example, in Chongqing, Qiantu Logistics implemented the replacement of the first batch of 10 new energy trucks. Compared with traditional procurement methods, the initial investment cost was reduced by 30%–50%, and the insurance premium was also lowered by about 30%.

Dai Haiyan, general manager of the Risk Information China Division at Lushang Lianxun, also analyzed for reporters: “The ‘vehicle–electric separation’ model is an important innovation exploration in the new energy vehicle industry. It separates the vehicle body from the battery within the traditional complete-vehicle sales model, and users can choose to lease batteries instead of purchasing them. However, this model also presents new challenges for insurance product design.”

Dai Haiyan frankly told reporters that in the “vehicle–electric separation” model, the ownership of the vehicle body is separated from the battery. This means that traditional complete-vehicle insurance needs to be split into vehicle body insurance and battery-related insurance. This involves redefining the insured subject matter and delineating the boundaries of responsibility when a loss occurs. For instance, if an accident involves battery damage, how to define the scope of compensation under vehicle body insurance and battery liability insurance requires establishing clear rules.

“In risk pricing, the ‘vehicle–electric separation’ model changes the risk structure of the traditional complete vehicle. The risk characteristics of the vehicle body are more similar to those of traditional gasoline vehicles, while the battery part involves complex factors such as battery degradation, performance changes during the leasing period, and replacement standards. This requires insurance companies to develop differentiated pricing models, while also considering the respective risk characteristics of the vehicle body and the battery. Innovations like this need the insurance industry to establish a more flexible actuarial pricing framework. In terms of claims services, the ‘vehicle–electric separation’ model involves more parties, including the policyholder, the vehicle body manufacturer, the battery operator, the insurance company, and others. When a loss occurs, the claims process needs to coordinate the interests of multiple parties, which may lead to a longer claims cycle and higher communication costs. Insurance companies need to establish a close cooperation mechanism with battery operators to ensure the efficiency and experience of claims services.” Dai Haiyan said.

In fact, accident responsibility determination under the “vehicle–electric separation” model is more complex. For example, if an accident is caused by a battery malfunction, how should responsibility be divided among different parties? This requires a clear legal framework and also requires more precise design of insurance contract terms.

Dai Haiyan believes that for the insurance innovation under the “vehicle–electric separation” model to be successfully implemented, the key breakthrough lies in establishing a data-sharing and responsibility-recognition framework for multiple parties to cooperate.

“Recommendations for the insurance industry are to advance three areas of work: first, establish standardized data interfaces between the vehicle body and the battery to ensure that insurers can obtain the necessary risk assessment data; second, clarify responsibility-recognition standards under different scenarios to provide a clear rule basis for insurance product design; third, promote deep cooperation between insurers and complete vehicle enterprises and battery operators, jointly developing insurance products that fit the needs.” Dai Haiyan said.

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