Brief history of auto insurance in China

People Insurance Company of China ( PICC ) provided the first local anesthetic car policy in China in the year 1950, which ended extraneous monopoly in the industry. Most consumers in China were not aware of car indemnity at origin. In 1980, car policy in China was gradually promoted along with the rapid growth of public transportation system and private cars. Starting in 1988, car insurance started to dominate the non-life policy marketplace in China. In 2006, the chinese government imposed mandate regulations on drivers to purchase liability cable car insurance. These regulations may have further boosted the car policy market in China. As of 2019, newfangled regulations were implemented to include more foreign indemnity companies in arrange to increase competitiveness .

Overview of the auto insurance market in China

Auto policy belongs to the non-life indemnity market in China. The car insurance market in China has a entire gross of 834.5 billion RMB and a 10 % year-on-year growth. In addition, car indemnity dominates the non-life policy market with over 70 percentage of the total agio .auto insurance revenue in China [source: baogao.chinabaogao.com Auto insurance revenue in China]

Types of auto insurance in China

Compulsory
liability insurance in China, for traffic accidents (交强险)

Compulsory liability insurance in China is used to cover third-party injuries and/or deaths in cable car accidents. It is compulsory for both private or commercial use. premium is regulated and stipulated by a bare evaluation table, according to vehicle types and a few early variables. As of May 1st 2012, foreign-invested policy companies are permitted to write compulsory liability policy for car accidents in China, subjugate to the anterior approval of China Insurance Regulatory Commission .

Commercial
motor insurance in China (商业险)

commercial centrifugal indemnity in China offers a wide fiscal auspices. This includes claims other than dealings collisions, such as larceny, key, weather or natural disasters, and wrong caused by colliding with stationary objects.

There are two segments of commercial motive insurance in China : basic risks and extra risks. car owners have to purchase indemnity for basic risks beginning, which will then provide them with access to extra hazard insurance. Basic risks include:

  1. Vehicle damage insurance covers all the damage to the car regardless of reason.
  2. Theft insurance covers the vehicle and anything happens in an event of burglary or theft.
  3. Quota-free insurance pays 100% compensation regardless of who is hold responsible for the accident.
  4. Passengers insurance covers all passengers and is purchased according to the number of car seats.

Additional risks include:

  1. Free compensation
    special insurance
    is when insurance company is responsible for compensation in the liability
    limit according to the deductible amount, based on the rate specified in the
    corresponding basic insurance clause.
  2.  Risk of spontaneous combustion refers to the compensation for
    the loss of the combustion vehicle caused by the failure of the vehicle’s
    electrical, wiring, fuel supply system and the cause of the cargo itself.

Gap insurance in China (差额保险)

Gap indemnity in China, often flogged by pushful car salesmen, covers the dispute between the measure you paid for your car and the total an insurance company would give you if it was wholly damaged or stolen. As break insurance in China is not a main form of car indemnity in China, which traditional indemnity companies do not offer. Nonetheless, many car finance institutions provides gap indemnity. Consumers who purchased car gap insurance are entitled to receive the claim like amount equal to the leverage price when vehicles are damaged or stolen. The “ col ” between the amount insurance company pays and the come consumers in the first place paid will be covered. Those who did not purchase opening insurance will receive compensation payments. however, the amount will probably to be much less than the buy monetary value of the fomite, as indemnity companies are only responsible to pay the deprecate car value .

Collateral
protection insurance in China (CPI)

When people buy vehicles through bank loans, bank will ask consumers to use their cars as collateral and buy collateral auspices indemnity ( CPI ) in China. If consumers can not pay their debts and that the car values can not cover the principal and interest of the loans, then the indemnity companies will pay for the amount short. Collateral security insurance in China promptly transfers function of risks from banks to the chinese policy companies. thus, banks much relax the credit condition evaluation of consumers. however, taiwanese insurance companies frequently re-values consumer credit rating condition to determine the chastise CPI rate ( policy rate ). This process is very stern since they have to bare more risks. CONTACT US NOW TO ANSWER YOUR CHINA BUSINESS QUESTIONS

Geographical distribution of car drivers in China

More market potential for car insurance lies in developed regions, as there are more drives. For example, Eastern and Northern part of China each accounts for a large percentage of total car drivers in China .geographical distribution of car drivers in China [source: NBSC & Chyxx.com Geographical distribution of car drivers in China]demographics of car drivers in China [source: sohu.com Car drivers in China]

Road safety in China and how it affects the auto insurance
market

The main causes of traffic accidents in China such as violating the traffic rules, over-speeding, intoxicated drive, driving without a license and recklessly driving in reverse make car indemnity in China increasingly important to cut the losses of car owners .Number of traffic accidents in China [source: Chinabaogao.com & Chyxx.com Traffic accidents in China] Developed regions normally have more dealings accidents since they are densely populate. thus, car owners from developed regions have a higher demand for car insurance. however, car indemnity demand for areas like Guizhou province are besides high as these areas are more prone to accidents with mountainous roads .distribution of car accidents in China by province [source: Chyxx Nmber of traffic accidents in China]

Consumers of auto insurance in China

Key consumers of auto insurance in China

Men are the chief consumers in China ’ second car policy market. They cover 75.8 % of the entire car insurance consumers leaving their women counterpart with only 24.2 %. however, more chinese women are becoming drivers and car owners, which means they will start to buy more commercial insurances for their cars. 31-40 year old individuals are presently the chief consumers of car insurance in China. however, as the phone number of 25-30 years old consumers is systematically growing, increasing number of young people purchasing cars and associate indemnity will be expected .

Consumer demand for car insurance in China

There are several factors that influence consumer demand. fuel costs and repair costs incurred in the function of car affect car policy purchases. excessive fuel costs would reduce the car use to a certain extent, while animate costs will be considered along with the buy of car policy in China to control the costs that may incur in the future. Consumers who purchase car insurance normally dramatize stronger safety conscious and insurance-related expertness. Higher educated individuals will have more buying awareness and demands for car policy. In addition, the degree of exile diligence development reflects the proportion of demand for public exile to private cars. thus, in areas with underdeveloped public transport, people are more likely to drive private cars, which would lead to a higher demand for cable car policy in that area. The income level besides seems to be one of the determine factors that contributes to the thunder cable car policy commercialize in China. Individuals or families with stronger purchasing ability are more bequeath to purchase cars that may increase the likely consumption of car insurance in China .

Purchasing reasons for auto insurance in China

Faster call settlement and service quality are the most authoritative factors for customers when considering for which car indemnity companies to choose from. They normally prefer to choose indemnity companies with lower premium and more services provided and may easily switch from one company to another if they feel unsated or feel that they are not spending money for value .car insurance in China - purchasing reasons [source: Wjx.cn Insurance purchase reason]

Consumer perception and discussion on car insurance in China

Zhihu is particularly relevant to reach higher, knowing social classes. The most common discussions on car indemnity centers on clearing of the types cable car insurances needed to be purchased and the considerations needed to be taken at purchase .how do Chinese consumers perceive auto insurance? [source: Zhihu.com Consumers discussion about auto insurance] convinced consumer perceptions of car indemnity in China suggests that it can cut consumer losses in traffic accidents and protect car owners ’ legitimate rights. different sales channels both on-line and offline are besides praised by consumers as they have made the choice and purchasing summons of cable car insurances much more commodious.

Chinese consumers ask: what are the benefits of buying car insurance in China [source: WeChat&Weibo Positive consumer perceptions of auto insurance in China] negative perceptions of customers by and large arise from the extra costs that results from conflict of interests between car indemnity sales in 4S stores and from the indemnity companies. many consumers are disappointed by the fake ad of some insurance companies, and feel that their gamble protection have been exploited for net income purposes .Chinese consumers ask: What are the negatives of buying car insurance in China [source: WeChat&Weibo Positive consumer perceptions of auto insurance in China]

Competitors
in the auto insurance
market in China

Auto insurance market in China is dominated by big domestic brands, ascribable to scarce insurance licenses and boisterous contest, small and medium-sized companies are difficult to grow through a traditional business model .market share of auto insurance companies in China [source: qianzhan.com Leading brands in China’s auto insurance market] In large car indemnity companies, car policy claims normally occupies 70 % of their sum payments. Third-party distributors ( such as 4S stores, agencies, etc. ) are very authoritative distribution channels for the chinese car indemnity companies. For case, in 2018, 90 % of CPIC ’ second car policy sales gross came from third-party distributors .Auto insurance companies' payment for insurance claims in China [source: qianzhan.com Payment for auto insurance claims in China]

Leading Players in the auto insurance market in China

PICC is one of the largest policy companies in China and is the leading player in the car insurance market in China. The company is devoted to fast car insurance claims and excellent after-sales services. PICC provides 9 types of car indemnity for different purposes, one exercise is coverage for scratched and better car windows. presently, owners of private vehicles with no more than 9 seats can directly purchase PICC ’ mho car policy on its web site and wage by Alipay or WeChat. PICC besides provides respective kinds of after-sales services to consumers which include 24-hours damage assessment serve and loose rescue service in mainland China. Consumers can request road rescue services for rid within 100 km of any mainland China cities. In an hand brake, consumers can besides request helicopter rescue and insurance claims through mobile phones. secret cable car consumers can immediately use PICC ’ s mobile app or its WeChat public score for claims, and the claims can be settled within one hour if accidents are of unilateral indebtedness and the losses incurred are below 10,000 RMB .leading auto insurance brand in China [source: picc.com PICC web page] ping AN is one of the Fortune 500 enterprises and is besides a leading brand in the car indemnity market in China. ping AN has about 40 million car indemnity consumers with high customer gratification achieved for many years. Consumers alone need 3 steps to purchase a car policy on Ping An ’ randomness product page. The 3 dim-witted steps listed in order are information fill, citation and payment operation ( mobile or bank cards ). They will then receive a sign and a security in 2 days through the mail. Consumers can apply for fast claim through Ping An ’ mho fluid app and receive the payments in 3 days if accidents are of clear or unilateral indebtedness with no injuries incurred. Road rescue services can be requested for detached by consumers who have cars with less than 12 seats. however, the rescue place must be within 100 km from any city .

Case study-Autohome.com (家家金融)

Autohome Inc. was founded in 2006. It is the leading on-line destination for car drivers in China. The mission of Autohome is to engage, educate and inform car consumers in China with everything they need to know about buy, using and selling cars. now, the platform besides provides car indemnity as an on-line distributor. Consumers can customize car indemnity with 20 % -30 % dismiss on the web site. By downloading the App, consumers can buy insurance, receive release rede and apply annual fomite inspection. Car insurance consumers can get premium paid directly on the web site in a short time. The platform besides offers emergency rescue and designated drive services .autohome is a leading car insurance provider in China [source: autohome.com Autohome web page]

Case study-CheChe.com (车车车险)

CheChe.com was launched in 2015. It is an on-line policy transaction platform that offers vehicle insurance products from different companies. Consumers are allowed to purchase car indemnity with the company through WeChat, Cheche ’ sulfur APP and their official web site. A convenient and flying purchase process is adopted. The platform provides car policy from more than 15 different companies and consumers can easily compare unlike types of indemnity and their consociate prices directly from the web site. Customized services are offered to give consumers suggestions on car indemnity based on the site of cars, which encourages to pick and select between different insurances .cheche.com is the leading auto insurance website in China [source: cheche.com Cheche web page]

Drivers of
the car insurance market
in China

The fast development the car insurance is driven by several factors. first, the huge vehicle market in China served as the basis for the rapid market growth. Despite that fomite sales in China declined in 2018, China remained as the largest car marketplace in the worldly concern and that the phone number of drivers in China has been rising steadily for the past several years. The sales tax income for the vehicle market have promote boosted the development of the car indemnity industry. second, patronize traffic accidents and the increasing road base hit awareness pushed for the expansion of the car insurance commercialize in China. Although the sum count of traffic accidents involving casualties slightly decreased in 2017, 63,772 deaths and a large number of forcible injuries were inescapably caused. due to the road accidents caused by many aged or inexperienced drivers, and the enhance public road condom awareness contributed by multi-agency education and promotion, the demands of car indemnity in China have greatly increased among cable car owners. policy support from the chinese government besides plays an important function. The chinese politics has been continuously releasing new policies during the past few years to regulate the car policy industry and supporting the growth of newly business model in this field. furthermore, with the increasing internet users in China, on-line indemnity platforms are becoming democratic and important distribution channels. Utilizing on-line platforms could potentially be a win-win position for both the policy companies and their customers. As reduced costs and improved sales efficiency can be achieved for the erstwhile, while a one-stop service with simplified purchasing process can be provided for the latter .

Opportunities for car insurance market in China

New car insurance business models

T raditional business model burdens the development of car indemnity market in China. many companies have already started using a modern business model. Internet plays a very significant function in the newfangled business models of car indemnity industry comparing to traditional brick-and-mortar 4S stores. insurance companies can efficaciously reduce costs by gradually replacing offline distributors with on-line platforms. With gaze to the congress of racial equality values required by users, car indemnity companies can build precise consumers profiles through big data, carry out preciseness market and improve call village services. Although traditional business model that are activated through sales agents in most China ’ s indemnity companies can secure high margins by increasing the price of policy, high monetary value and investment to maintain market share will be required. many policy companies are pushed to set up branches at different cities and originate price wars against one another. The new business model is centered around on-line sales and promotions preferably than offline. This scheme effectively decreases costs and improves services quality. Self-operated and third-party platforms will be the main sales channels of new commercial enterprise exemplar .

Innovation in auto insurance business models

Usage-based policy ( UBI ) is besides known arsenic pay up as you drive ( PAYD ), pay how you drive ( PHYD ) and mile-based car policy. The costs of this policy are dependent upon the character of vehicle used, measured against time, distance, behavior and place. It requires initiation of UBI devices or UBI mobile app in vehicles to collect the datum of driving behaviors, fourth dimension, distance, etc. The datum will be sent to a UBI system/platform, and will be stored for late use. last, car insurance companies can make preciseness market strategy ( including price ) to target specific groups using this invention .

Obstacles of China’s auto insurance market

Some car policy companies do not have high quality service as they have focused their efforts on reducing cost rather than improving after-sales services. Thus, many consumers are disappointed at the attitude of staffs. furthermore, due to the fact that car policy market in China is still at an early modernize stage, patronize policy scams have occurred during the past respective years with not enough legal auspices. therefore, how to effectively prevent and curb policy imposter has become an pressing problem to be solved in the car indemnity diligence. furthermore, indemnity companies assess the degree of damage of vehicles to decide the amount of compensation to be provided. however, many assessment results are a lot lower than consumers ’ expectations. not to mention that the claim procedures are much complicated and customers do not receive requital in time.

In order to attract more clients, many car insurance companies lowered their prices to increase the rate of compensation. however, many some minor and culture medium companies could not receive adequate gross to cover their expenditures from such a strategy. overall, car policy market in China is developing quickly and there is a lot of opportunity to be seized within this market growth. meanwhile, the demand for quality service is increasing, challenging companies to compete with advanced business models and superior customer service.

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