Overview of the auto insurance market in China<\/h2>\n\n\n\n
Auto insurance belongs to the non-life <\/a>insurance<\/a> market in China. The car insurance market in China has a total revenue of 834.5 billion RMB<\/a> and a 10% year-on-year growth. In addition, auto insurance dominates the non-life insurance market with over 70 percent of the total premium.<\/p>\n\n\n\n Compulsory liability insurance in China is used to cover<\/a> third-party injuries and\/or deaths in car accidents. It is compulsory for both private or commercial use. Premium is regulated and stipulated by a simple rating table, according to vehicle types and a few other variables. As of May 1st<\/sup> 2012, foreign-invested insurance companies are permitted to write compulsory liability insurance for car accidents in China, subject to the prior approval of China Insurance Regulatory Commission.<\/p>\n\n\n\n Commercial motor insurance in China offers a wider financial protection. This includes claims other than traffic collisions, such as theft, keying, weather or natural disasters, and damage caused by colliding with stationary objects. <\/p>\n\n\n\n There are two segments of commercial motor insurance in China:\nbasic risks and additional risks. Car owners have to purchase insurance for\nbasic risks first, which will then provide them with access to additional risk insurance.\n<\/p>\n\n\n\n Basic risks include:<\/strong><\/p>\n\n\n\n Additional risks include:<\/strong><\/p>\n\n\n\n Gap insurance in China, often flogged by pushy car salesmen, covers the difference between the amount you paid for your car and the amount an insurance company would give you if it was totally damaged or stolen. As gap insurance in China is not a main form <\/a>of car insurance in China, which traditional insurance companies do not offer. Nonetheless, many auto finance institutions provides gap insurance. Consumers<\/a> who purchased car gap insurance are entitled to receive the exact same amount equal to the purchase price when vehicles are damaged or stolen. The \u201cgap\u201d between the amount insurer pays and the amount consumers originally paid will be covered. Those who did not purchase gap insurance will receive compensation payments. However, the amount will likely to be much less than the purchase price of the vehicle, as insurance companies are only responsible to pay the depreciated car value. <\/p>\n\n\n\n When people buy vehicles through bank loans, bank will ask consumers\nto use their cars as collateral and purchase\ncollateral<\/a> protection insurance (CPI) in China. If consumers can not pay\ntheir debts and that the car values can not cover the principal and interest of\nthe loans, then the insurance companies will pay for the amount short. Collateral protection insurance in\nChina readily transfers part of risks from banks to the\nChinese insurance companies. Thus, banks often relax the credit status\nevaluation of consumers. However, Chinese insurance companies often re-values\nconsumer credit status to determine the correct CPI rate (insurance rate). This\nprocess is very strict since they have to bare more risks.<\/p>\n\n\n\n CONTACT US NOW TO ANSWER YOUR CHINA BUSINESS QUESTIONS<\/a><\/span><\/p>\n\n\n\n More market potential for auto insurance lies in developed regions, as there are more drives. For example, Eastern and Northern<\/a> part of China each accounts for a large percent of total car drivers in China. <\/p>\n\n\n\n The main\ncauses of traffic accidents in China such as violating the traffic rules, over-speeding,\ndrunk driving, driving without a license and recklessly driving in reverse make auto insurance in China increasingly important\nto cut the losses of car owners.<\/p>\n\n\n\n Developed regions usually have more traffic accidents since they are\ndensely populated. Thus, car owners from developed regions have a higher demand\nfor auto insurance. However, auto insurance demand for areas like Guizhou\nprovince are also high as these areas are more prone to accidents with\nmountainous roads.<\/p>\n\n\n\n Men are the main consumers in China’s auto insurance market. They cover 75.8% of the total auto 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 currently the main consumers of auto insurance in China. However, as the number of 25-30 years old consumers is consistently growing, increasing number of young people purchasing cars and related insurance will be expected. <\/p>\n\n\n\n There are several factors that influence consumer demand<\/a>. Fuel costs and repair costs incurred in the use of car affect auto insurance purchases. Excessive fuel costs would reduce the automobile usage to a certain extent, while repair costs will be considered along with the purchase of car insurance in China to control the costs that may incur in the future. Consumers who purchase auto insurance usually adopt stronger safety conscious and insurance-related expertise. Higher educated individuals will have more purchasing awareness and demands for auto insurance. In addition, the degree of transportation industry development reflects the proportion of demand for public transportation 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 car insurance in that area. The income level also seems to be one of the influencing factors that contributes to the booming car insurance market in China. Individuals or families with stronger purchasing power are more willing to purchase cars that may increase the potential consumption of auto insurance in China.<\/p>\n\n\n\n Faster claim settlement and service quality are the most important<\/a> factors for\ncustomers when considering for which auto insurance companies to choose from. They\nusually prefer to choose insurance companies with lower premium and more services\nprovided and may easily switch from one company to another if they feel unsatisfied\nor feel that they are not spending money for value. <\/p>\n\n\n\n Zhihu is especially relevant to reach higher, well-educated social classes. The most common discussions on auto insurance centers on clarification of the types car insurances needed to be purchased and the considerations needed to be taken at purchase. <\/p>\n\n\n\n Positive\nconsumer perceptions of auto insurance in China suggests\nthat it can cut consumer losses in traffic accidents and protect car owners\u2019\nlegitimate rights. Different sales channels both online and offline are also\npraised by consumers as they have made the selection and purchasing process of\ncar insurances much more convenient.<\/p>\n\n\n\n Negative perceptions of customers mostly arise from the extra costs that results from conflict of interests between auto insurance sales in 4S stores and from the insurance companies. Many consumers are disappointed by the false advertising <\/a>of some insurance companies, and feel that their risk protection have been exploited for profit purposes.<\/p>\n\n\n\n Auto insurance market in China is dominated<\/a> by large domestic\nbrands, due to scarce insurance licenses and fierce competition, small and\nmedium-sized companies are difficult to grow through a traditional business model.<\/a><\/p>\n\n\n\n In large auto insurance companies,\ncar insurance claims usually occupies 70% of their total payments. Third-party\ndistributors (such as 4S stores, agencies, etc.) are very important\ndistribution channels for the Chinese auto insurance companies. For example, in\n2018, 90% of CPIC\u2019s auto insurance sales revenue came from third-party\ndistributors.<\/p>\n\n\n\n PICC is one of the largest insurance companies in China and is the leading player in the car insurance market in China. The company is devoted to fast auto insurance claims and excellent after-sales services. PICC provides 9 types of auto insurance for different purposes, one example is coverage for scratched and broken car windows. Currently, owners of private vehicles with no more than 9 seats can directly purchase PICC\u2019s auto insurance on its website and pay by Alipay or WeChat. PICC also provides several kinds of after-sales services to consumers which include 24-hours damage assessment service and free rescue service in mainland China. Consumers can request road rescue services for free within 100 km of any mainland China cities. In an emergency, consumers can also request helicopter rescue and insurance claims through mobile phones. Private car consumers can directly use PICC\u2019s mobile app or its WeChat public account for claims, and the claims can be settled within one hour if accidents are of unilateral liability and the losses incurred are below 10,000 RMB.<\/p>\n\n\n\n PING AN is one of the Fortune 500\nenterprises and is also a leading brand in the auto insurance market in China. PING AN has around 40\nmillion<\/a> car insurance consumers\nwith high customer satisfaction achieved for many years. Consumers only need 3\nsteps to purchase a car insurance on Ping An\u2019s product page. The 3 simple steps\nlisted in order are information filling, quotation and payment procedure\n(mobile or bank cards). They will then receive a contract and a certificate in\n2 days through the mail. Consumers can apply for fast claim through Ping An\u2019s\nmobile app and receive the payments in 3 days if accidents are of clear or unilateral\nliability with no injuries incurred. Road rescue services can be requested for\nfree by consumers who have cars with less than 12 seats. However, the rescue\nplace must be within 100 km from any city.<\/p>\n\n\n\n Autohome Inc. was founded in 2006.\nIt is the leading online destination<\/a> for car drivers in China. The\nmission of Autohome is to engage, educate and inform auto consumers in China\nwith everything they need to know about buying, using and selling cars. Now,\nthe platform also provides auto insurance as an online distributor.<\/a> Consumers\ncan customize car insurance with 20%-30% discount on the website. By\ndownloading the App, consumers can buy insurance, receive free counseling and\napply annual vehicle inspection. Car insurance consumers can get premium paid directly\non the website in a short time. The platform also offers emergency rescue and\ndesignated driving services.<\/p>\n\n\n\n CheChe.com was launched in 2015. It\nis an online insurance transaction platform that offers vehicle insurance\nproducts from different companies. Consumers are allowed to purchase auto\ninsurance with the company through WeChat, Cheche\u2019s APP and their official\nwebsite. A convenient and fast purchase process is adopted. The platform\nprovides auto insurance from more than 15 different companies and consumers can\neasily compare different types of insurance and their associated prices\ndirectly from the website. Customized services are offered to give consumers\nsuggestions on auto insurance based on the situation of cars, which encourages\nto pick and select between different insurances. <\/p>\n\n\n\n The fast development the auto insurance is driven by several factors. Firstly, the huge vehicle market in China served as the basis for the rapid market growth. Despite that vehicle sales in China declined in 2018, China remained as the largest car market<\/a> in the world and that the number of drivers in China has been rising steadily for the past several years. The sales revenue for the vehicle market have further boosted the development of the auto insurance industry. Secondly, frequent traffic accidents and the increasing road safety awareness pushed for the expansion of the auto insurance market in China. Although the total number of traffic accidents involving casualties slightly decreased in 2017, 63,772 deaths<\/a> and a large number of physical injuries were inevitably caused. Due to the road accidents caused by many elderly or inexperienced drivers, and the enhanced public road safety awareness contributed by multi-agency education and publicity, the demands of auto insurance in China have greatly increased among car owners.<\/p>\n\n\n\n Policy support from the Chinese government also plays an important role. The Chinese government has been continuously releasing new policies during the past few years to regulate the auto insurance industry and supporting the development of new business model in this field. Moreover, with the increasing internet users in China, online insurance platforms are becoming popular and important distribution channels. Utilizing online platforms could potentially be a win-win situation for both the insurance companies and their customers. As reduced costs and improved sales efficiency can be achieved for the former, while a one-stop service with simplified purchasing process can be provided for the latter. <\/p>\n\n\n\n T<\/strong>raditional business model burdens the\ndevelopment of car\ninsurance market in China. Many companies have already started using a\nnew business model. Internet plays a\nvery important role in the new business models of auto insurance industry\ncomparing to traditional brick-and-mortar 4S stores. Insurance companies can effectively reduce costs by\ngradually replacing offline distributors with online platforms. With regard\nto the core values required by users, auto insurance companies can build\nprecise consumers profiles through big data, carry out precision marketing and\nimprove claim settlement services. Although traditional business model that are\nactivated through sales agents in most\nChina\u2019 s insurance companies can secure high margins by increasing the price of\ninsurance, high cost and investment to maintain market share<\/a>\nwill be required. Many insurance companies are pushed to set up branches at\ndifferent cities and initiate price wars against one another. The new business model is centered around online\nsales and promotions rather than offline. This strategy effectively decreases\ncosts and improves services quality. Self-operated and third-party platforms\nwill be the main sales channels of new business model.<\/p>\n\n\n\n Usage-based insurance (UBI) is also\nknown as pay as you drive (PAYD), pay how you drive (PHYD) and mile-based auto\ninsurance. The costs of this insurance are dependent upon the type of vehicle\nused, measured against time, distance, behavior and place. It requires installation\nof UBI devices or UBI mobile app in vehicles to collect the data of driving\nbehaviors, time, distance, etc. The data will be sent to a UBI system\/platform,\nand will be stored for later use. Lastly, auto insurance companies can make precision marketing strategy\n(including price) to target specific groups using this innovation.<\/p>\n\n\n\n Some auto insurance companies do not have high quality service as\nthey have focused their efforts on reducing cost rather than improving\nafter-sales services. Thus, many consumers are disappointed at the attitude of\nstaffs. Moreover, due to the fact that auto\ninsurance market in China\nis still at an early developing stage, frequent\ninsurance scams have occurred during the past several years with not enough\nlegal protection. Therefore, how to effectively prevent and curb insurance\nfraud has become an urgent problem to be solved in the auto insurance industry. <\/p>\n\n\n\n Furthermore, insurance companies assess\nthe degree of damage of vehicles to decide the amount of compensation to be\nprovided. However, many assessment results are much lower\nthan consumers\u2019 expectations. Not to\nmention that the claim procedures are often complicated and customers do not\nreceive payment in time.\n<\/p>\n\n\n\n In order to attract more clients, many auto insurance companies lowered\ntheir prices to increase the rate of\ncompensation. However, many some small and medium companies could not receive enough\nrevenue to cover their expenditures from such a strategy.<\/p>\n\n\n\n Overall, auto insurance market in China\nis developing rapidly and there is a lot\nof opportunity to be seized within this market growth. Meanwhile, the demand\nfor quality service is increasing, challenging companies to compete with\ninnovative business models and superior customer service. <\/p>\n\n\n\n![\"auto](\"https:\/\/daxueconsulting.com\/wp-content\/uploads\/2019\/11\/daxue-consulting-auto-insurance-market-in-china-auto-insurance-revenue-in-china-min-800x381.jpg\")
Types of auto insurance in China<\/h2>\n\n\n\n
Compulsory\nliability insurance in China, for traffic accidents (\u4ea4\u5f3a\u9669)<\/h3>\n\n\n\n
Commercial\nmotor insurance in China (\u5546\u4e1a\u9669)<\/h3>\n\n\n\n
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Gap insurance<\/em><\/a> in China<\/em> (\u5dee\u989d\u4fdd\u9669)<\/h3>\n\n\n\n
Collateral\nprotection insurance in China (CPI)<\/h3>\n\n\n\n
Geographical distribution of car drivers in China<\/h2>\n\n\n\n
![\"geographical](\"https:\/\/daxueconsulting.com\/wp-content\/uploads\/2019\/11\/daxue-consulting-Auto-Insurance-market-in-China-Geographical-distribution-of-car-drivers-in-China-800x437.png\")
![\"demographics](\"https:\/\/daxueconsulting.com\/wp-content\/uploads\/2019\/11\/daxue-consulting-Auto-Insurance-market-in-China-car-drivers-in-China-800x364.png\")
Road safety in China and how it affects the auto insurance\nmarket<\/h2>\n\n\n\n
![\"Number](\"https:\/\/daxueconsulting.com\/wp-content\/uploads\/2019\/11\/daxue-consulting-auto-insurance-market-in-china-number-of-traffic-accidents-in-china-min-800x540.jpg\")
![\"distribution](\"https:\/\/daxueconsulting.com\/wp-content\/uploads\/2019\/11\/daxue-consulting-auto-insurance-market-in-china-provinces-ranked-by-number-of-traffic-accidents-min-800x272.jpg\")
Consumers of auto insurance in China<\/h2>\n\n\n\n
Key consumers of auto insurance in China<\/h3>\n\n\n\n
Consumer demand for car insurance in China<\/h3>\n\n\n\n
Purchasing reasons for auto insurance in China<\/h3>\n\n\n\n
![\"car](\"https:\/\/daxueconsulting.com\/wp-content\/uploads\/2019\/11\/daxue-consulting-auto-insurance-market-in-china-purchase-reason-min-800x384.jpg\")
Consumer perception and discussion on car insurance in China<\/h3>\n\n\n\n
![\"how](\"https:\/\/daxueconsulting.com\/wp-content\/uploads\/2019\/11\/daxue-consulting-auto-insurance-market-in-china-consumers-questions-on-zhihu-min-800x433.jpg\")
![\"Chinese](\"https:\/\/daxueconsulting.com\/wp-content\/uploads\/2019\/11\/daxue-consulting-auto-insurance-market-in-china-consumers-positive-perceptions-min-800x301.jpg\")
![\"Chinese](\"https:\/\/daxueconsulting.com\/wp-content\/uploads\/2019\/11\/daxue-consulting-auto-insurance-market-in-china-negative-positive-perceptions-min-1-800x322.jpg\")
Competitors\nin the auto insurance\nmarket in China<\/strong><\/h2>\n\n\n\n
![\"market](\"https:\/\/daxueconsulting.com\/wp-content\/uploads\/2019\/11\/daxue-consulting-auto-insurance-market-in-china-leading-brands-min-800x348.jpg\")
![\"Auto](\"https:\/\/daxueconsulting.com\/wp-content\/uploads\/2019\/11\/daxue-consulting-auto-insurance-market-in-china-payment-for-insurance-claim-min-800x582.jpg\")
Leading Players in the auto insurance market in China<\/h3>\n\n\n\n
![\"leading](\"https:\/\/daxueconsulting.com\/wp-content\/uploads\/2019\/11\/daxue-consulting-auto-insurance-market-in-china-picc-web-page-min-800x427.jpg\")
Case study-Autohome.com (\u5bb6\u5bb6\u91d1\u878d)<\/h3>\n\n\n\n
![\"autohome](\"https:\/\/daxueconsulting.com\/wp-content\/uploads\/2019\/11\/daxue-consulting-auto-insurance-market-in-china-autohome-web-page-min-800x523.jpg\")
Case study-CheChe.com (\u8f66\u8f66\u8f66\u9669)<\/h3>\n\n\n\n
![\"cheche.com](\"https:\/\/daxueconsulting.com\/wp-content\/uploads\/2019\/11\/daxue-consulting-auto-insurance-market-in-china-cheche-web-page-min-800x588.jpg\")
Drivers of\nthe car insurance market\nin China<\/strong><\/h2>\n\n\n\n
Opportunities for car insurance market in China<\/strong><\/h2>\n\n\n\n
New car insurance business models<\/h3>\n\n\n\n
Innovation in auto insurance business models<\/h4>\n\n\n\n
Obstacles of China\u2019s auto insurance market<\/h2>\n\n\n\n
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