Miller Canfield
car policy in China is divided into mandate car liability policy and other types of car insurance ( normally referred to as “ commercial ” car policy ). The compulsory car liability coverages ( generally third-party death and injury other than passengers and the driver, medical and fomite wrong ) are well-known to consumers. commercial car policy ( coverage for wrong and injuries to vehicles and passengers ) is not widely available .
On September 2, 2019, the China Banking and Insurance Regulatory Commission ( “ CBIRC ” ) issued “ Guiding Opinions on Implementing Comprehensive Reform of Auto Insurance ” ( the “ Guiding Opinions ” ) to expand coverage and lower premiums of mandate car liability insurance, and encourage growth of new commercial car indemnity. The changes of expanding coverage and lowering insurance premiums for compulsory car indemnity have been wide welcomed by consumers ; however, the new premium pricing rules have resulted in some commercial car insurance products being swallow from the marketplace .
1. Expanded Coverage of Mandatory Auto Liability Insurance for Death and Injury and Medical Expenses

The raw rules increase the death and injury coverage from RMB11,000 to 18,000 ; and the medical expense coverage limits from RMB10,000 to RMB18,000 ; however, fomite damage liability coverage remains RMB2,000 should the insure be liable ; and RMB100 should the see not be apt. After the newfangled rules, the sum coverage is increased from RMB122,000 to RMB200,000 should the guarantee be apt ; and the total coverage is increased from RMB12,100 to RMB19,900 should the guarantee not be liable .
2. Further Reductions in Premium Rates of Mandatory Auto Liability Insurance for “Premium” Applicants
presently, the standard premium rate is set at RMB950 per year, and the indemnity company may adjust the rate up or downward. Before the new rules, the maximum range of up and down alteration was 30 % of the then-effective standard premium rate. After the new rules became effective, the up allowable adaptation remains the same, but the down permissible alteration has been increased from 30 % to 50 %. The downward alteration is available to those insureds who have not filed claims in the past three years. This means that the premium rate for these “ bounty ” applicants may be a low as RMB475 per year based on the current standard agio rate .
In summation to lowering premiums, the Guiding Opinions besides require insurance companies to decrease the measure of certain charges that may be included in the bounty rate. For model, the upper berth allowable agio adjustment for ad fees, commissions account payable to policy brokers and customer appreciation giving has been decreased from 35 % to 25 %.

3. Encourage Development of New Commercial Insurance Products and Expanded Commercial Insurance Coverage
newly added commercial policy products include car larceny and robbery policy ; glass damage insurance ; indemnity to cover the damages caused by fire or vehicle explosion due to reasons such as battery failure, break circuit, or broken natural gas supply system ; locomotive protective covering indemnity against water system concentration damage ; and insurance to cover when the third-party liable person can not be found. The newfangled predominate besides allows risk-only insurance and offers the policy product with nothing deductibles ; last, the new convention encourages development of raw products providing coverage for raw energy vehicles, prolong warranties, and value-added services including proxy vehicle checks, road rescue services, driving services and car safety inspections .
4. Guiding Opinions Present New Challenges to Insurances Companies and Automotive Service Providers

The new price mechanisms may result in indemnity companies withdrawing some current types of commercial insurance products. concisely after the issue of the Guiding Opinion, on September 9, 2020, CBIRC further issued ‎Model Actuarial Provisions for Commercial Auto Insurance‎, providing how the indemnity company shall establish the premium for car commercial insurance. The issue of these more restrictive premium pace requirements made some indemnity companies which already offer certain types of commercial car indemnity products discontinue offering them pending study of the impact of the new agio price rules .
These more restrictive pricing mechanisms have indirectly affected car service providers seeking to expand in China. For example, a alien company providing road rescue and car repair services looking to enter the chinese commercialize sought to develop a strategic cooperation broadcast with a boastfully chinese car policy party to develop a comprehensive extend guarantee program in support of the car rescue and rectify services it planned to offer in China. however, in the middle of developing the program, the indemnity company withdrew, citing its concern that the proposed program is not in conformity with the premium pricing requirements of the Guiding Opinions, forcing the car avail providers to explore alternate options with respect to its China marketplace submission scheme .
We expect that these challenges will sort themselves out as newly commercial car indemnity products designed to meet the requirements of the Guiding Opinions are developed and offered in China .

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