China’s EV insurers move towards profitability on higher premiums, AI adoption - SCMP

China’s EV insurers move towards profitability on higher premiums, AI adoption - SCMP

China’s electric vehicle (EV) insurers are gradually shifting toward profitability through higher premiums and AI-driven risk assessment, despite persistent challenges in the rapidly evolving market. The sector, which recorded a 5.7 billion yuan ($802 million) underwriting loss in 2024, faces elevated claim frequencies and repair costs linked to EVs, particularly among younger drivers and ride-hailing operators according to industry analysis. Insurers report that EV owners file claims at twice the rate of gasoline vehicle owners, while battery damage and specialized repair requirements drive up costs. To offset these pressures, premiums for EV coverage have risen sharply—by 20% to 100% compared to traditional vehicles—though losses persist as risk models struggle to keep pace with technological and behavioral shifts as reports indicate.

AI adoption is emerging as a critical tool for insurers to refine pricing and risk differentiation. Companies like Ping An Property & Casualty have developed algorithms to distinguish ride-hailing drivers from private users, while others leverage data on driving patterns, vehicle usage, and geographic factors to tailor premiums according to industry sources. For instance, SunCar Technology Group, a digital insurance services provider, integrates AI models to assess risk based on factors such as car color (e.g., white vehicles linked to lower accident rates), commuting routes, and proximity to repair facilities as research shows. These innovations aim to address inefficiencies in underwriting and claims processing, though data access barriers and rapid technological changes remain hurdles according to automotive analysts.

Regulatory interventions, including the government’s “Easy to Insure” platform to connect EV owners with insurers and guidelines to standardize repair costs, are also shaping the landscape as reported. While the industry’s combined ratio for EV policies improved slightly to 107% in 2024 from 109% in 2023, profitability remains uneven, with larger insurers like Ping An reporting underwriting profits in 2024 and early 2025 according to industry data. Analysts caution that widespread profitability may take three years as insurers refine models and collaborate with automakers to address systemic risks as industry reports indicate.

With EVs projected to account for over a third of China’s auto insurance market by 2030, the sector’s ability to balance affordability, innovation, and risk management will be pivotal to its long-term sustainability according to market projections.