New Energy Vehicle Insurance Rate Reform Lands Again, Industry Accelerates Search for Solution to Dilemma

With the continuous rise in the penetration rate of new energy vehicles, the associated new energy vehicle insurance, as an important supporting service, is undergoing a profound transformation in its pricing mechanism. On March 23, Beijing Business Daily reporters learned that the autonomous pricing coefficient for new energy vehicle insurance has recently been optimized and adjusted again, expanding from [0.6, 1.4] to [0.55, 1.45]. This is the second expansion since September 2025.

In recent years, China’s new energy vehicle industry has developed rapidly. By 2025, the production and sales of new energy vehicles both exceeded 16 million, with year-on-year growth of 29% and 28.2%, respectively, maintaining the top global position for 11 consecutive years. Despite the rapid growth, complaints from vehicle owners about high costs and insurers about losses have persisted in the new energy vehicle insurance sector.

However, the industry continues to explore reforms in new energy vehicle insurance, from optimizing pricing coefficients to better reflect risk, to exploring the “vehicle-battery separation” model to clarify battery asset risks, and to encouraging automakers to leverage data and technology throughout the supply chain. This innovation covers cost control for repairs, precise insurance pricing, improved industry regulation, and future development planning. It is fundamentally reshaping the ecosystem of new energy vehicle insurance and promoting a win-win situation for vehicle owners and insurers.

Further Expansion of Pricing Range

According to industry sources, the autonomous pricing coefficient range for new energy vehicle insurance has recently been adjusted again, from [0.6, 1.4] to [0.55, 1.45], and is now implemented nationwide.

The so-called autonomous pricing coefficient is a factor that insurers can adjust within a certain range based on risk factors such as vehicle model, usage nature, and driver behavior, on top of the baseline premium. The range of this coefficient directly determines the pricing boundaries for insurers. Greater autonomy in pricing means insurers have more flexibility to adjust premiums based on actual risk levels, allowing for differentiated pricing that better matches risk, improves underwriting efficiency, and enables high-quality vehicle owners to enjoy more favorable premiums.

For ordinary consumers, the most concern is whether their future insurance premiums will increase or decrease, and how much room there is for adjustment. Using the commercial auto insurance premium formula: Premium = Base premium × No-Claim Discount (NCD) coefficient × Autonomous pricing coefficient, the theoretical maximum reduction in premium after adjustment could be 8.33%, calculated as (0.55 - 0.6)/0.6 = -8.33%. Conversely, the maximum potential increase is about 3.57%, calculated as (1.45 - 1.4)/1.4 = 3.57%.

However, it should be noted that this is only a theoretical fluctuation range. Actual premium changes are also influenced by other factors. Jiang Han, senior researcher at Pangu Think Tank, stated that lowering the autonomous pricing coefficient means that low-risk, high-quality vehicle owners could receive larger discounts in theory. But the actual discount received will be less than the maximum possible because premiums are also affected by factors such as traffic violations and vehicle repair ratios. The adjustment of the coefficient simply sets the upper and lower limits for pricing.

Which new energy vehicle owners can reach the new “floor” price? Sun Yuhao, senior partner and lawyer at Shanghai Hahai Yongtai Law Firm, said that typical household owners with good driving habits, zero accident records, and low repair costs will benefit first from lower premiums because insurers are motivated to attract this high-quality business at lower prices. Conversely, commercial vehicles such as ride-hailing cars with longer mileage and higher accident rates, or high-end models with costly repairs or extremely high repair ratios, face the possibility of higher premiums due to their higher risk profile.

Progressive Reform of New Energy Vehicle Insurance

In fact, this is the second time the autonomous pricing coefficient for new energy vehicle insurance has been adjusted. The first adjustment occurred in September 2025, when the range expanded from [0.65, 1.35] to [0.6, 1.4].

Compared to the 2023 expansion of traditional fuel vehicle commercial insurance coefficients from [0.65, 1.35] to [0.5, 1.5], the adjustments for new energy vehicle insurance have been more frequent and with smaller increments, not a one-step change. Sun Yuhao explained that this “small steps, quick adjustments” approach aims to prevent market chaos, such as vicious price wars or sharp premium fluctuations, by giving insurers enough time to upgrade actuarial models and accumulate multi-dimensional data on driving behavior and vehicle wear and tear. This ensures a smoother alignment of risk and price.

This incremental adjustment approach also aligns with regulatory guidance. Early last year, the General Office of the Financial Supervision and Administration, along with three other departments, issued the “Guiding Opinions on Deepening Reform, Strengthening Regulation, and Promoting High-Quality Development of New Energy Vehicle Insurance” (hereinafter “Guiding Opinions”). It mentioned the need to prudently optimize the range of autonomous pricing coefficient fluctuations, effectively leverage market mechanisms, and promote better matching of insurance prices with risks, thereby enhancing the scientific basis of pricing.

Industry analysts believe that the continued expansion of autonomous pricing rights will push insurers to further adjust the average premium per policy dynamically, based on their risk control capabilities, business structure, and overall cost ratios. This could further optimize underwriting profit margins. However, it also raises higher demands on insurers’ pricing and risk management capabilities, encouraging more precise pricing and more efficient risk control.

Sun Yuhao emphasized that insurers must abandon coarse pricing models and shift toward refined management. They need to utilize big data, artificial intelligence, and other technologies to accurately identify risk differences across vehicle types, usage patterns, and driving behaviors, and establish corresponding rate systems. Otherwise, they risk losing customers due to overpricing or incurring underwriting losses from underpricing.

“Vehicle-Battery Separation” Reshaping Risk Models

In response to the long-standing dilemma of “high costs for vehicle owners, insurers losing money,” the industry is not only adjusting rates but also exploring deeper structural reforms.

By 2026, the industry is accelerating efforts to explore the “vehicle-battery separation” model for commercial auto insurance. This approach involves selling, managing, and insuring the vehicle and the battery as separate assets.

Policy signals for this exploration have already been issued. The “Guiding Opinions” proposed researching and exploring the “vehicle-battery separation” model for auto insurance products to provide scientific and reasonable coverage for related new energy vehicles. In February this year, the Shenzhen Local Financial Supervision Bureau and other departments jointly issued the “Action Plan to Support Technological Innovation and Industrial Development of the Insurance Industry (2026–2028),” which also pointed out the exploration of “vehicle-battery separation” insurance products in specific scenarios like urban transportation.

Some regions have already launched pilot projects. Beijing Business Daily learned that Chongqing Qiantu Logistics has implemented the first batch of insurance for 10 new energy trucks with the battery separated. Compared to traditional procurement, initial investment costs decreased by 30–50%, and insurance premiums also dropped by about 30%.

Why does “vehicle-battery separation” effectively reduce premiums and optimize risk? Jiang Han explained that in the traditional model, the battery is one of the most expensive components, and its high risk directly increases the insured amount and premium. Separating the battery reduces the insured value of the vehicle to exclude the battery, significantly lowering premiums—pilot data shows reductions of over 30%. Additionally, this model helps reduce the vehicle’s overall risk exposure. The battery, managed and maintained by professional operators, is less prone to improper charging/discharging and related failures or fires, thus lowering the likelihood of claims from the source.

Sunshine Insurance Shenzhen Branch also emphasized that “vehicle-battery separation” is viewed as a key innovation to systematically address the core issues of “vehicle owner value preservation anxiety” and “complexity of insurer damage assessment,” aiming to clarify risk subjects and achieve precise asset-risk matching, providing more scientific insurance solutions.

Holistic Collaboration for Solutions

Whether through optimizing pricing coefficients or exploring the “vehicle-battery separation” model, each step is a crucial point in breaking through the current challenges of new energy vehicle insurance. Solving the issues of high premiums and underwriting losses requires time to accumulate data and experience, as well as a comprehensive approach. It involves mobilizing insurers, automakers, and other stakeholders within the ecosystem to strengthen collaboration, explore innovative paths, and promote healthy, sustainable industry development.

At the top-level design level, regulators are actively promoting cross-industry cooperation. At the 2025 Financial Street Forum, Yin Jiangao, Director of the Property Insurance Supervision Department (Reinsurance Supervision Department) of the China Banking and Insurance Regulatory Commission, stated that future efforts will include guiding insurers and automakers to sign cooperation memoranda, explore the construction of a comprehensive vehicle classification system, and reduce the full lifecycle costs of vehicle use, aiming for win-win outcomes for consumers, automakers, and insurers.

In market practice, insurers and automakers are jointly building repair ecosystems and sharing data resources, which are key to breaking the current deadlock. Industry insiders told Beijing Business Daily that insurers should increase investment in R&D for new energy vehicle technologies, focusing on risks in core areas like the three-electric system and intelligent driving. By combining historical claims data with vehicle technical parameters, they can develop more accurate risk assessment models, move away from traditional pricing limitations, set reasonable premiums, and balance risk with fairness. Additionally, deeper cooperation with automakers—using vehicle networking and IoT technologies to legally obtain dynamic data such as driving behavior and battery health—can enable differentiated pricing strategies like “one person, one price, one trip, one fee,” rewarding safe drivers with lower premiums and accurately covering high-risk groups, thus addressing core issues of “pricing difficulty” and “high claims.”

Source: Beijing Business Daily