TLDRs;
- Chinese insurers lost $802M on EV policies in 2024, with repair costs and claims outstripping premiums.
- EV owners, often younger, file claims nearly twice as often as gasoline car drivers, driving up insurer losses.
- Regulators are pushing new rules for data sharing, standard policies, and repair cost reductions to ease the crisis.
- Automakers like BYD and Tesla are entering the insurance market, betting on vertical integration and data advantages.
China’s electric vehicle (EV) boom has fueled record sales, but the insurance market tied to this growth is facing mounting financial strain.
According to data from the China Association of Actuaries, insurers lost 5.7 billion yuan (US$802 million) underwriting policies for new energy vehicles (NEVs) in 2024. Despite a premium income of nearly 141 billion yuan, higher claims and soaring repair costs left companies with heavy deficits, marking the third consecutive year of losses in the segment.
The shortfall highlights the growing disconnect between rapid EV adoption and outdated risk assessment tools. China has more than 20 million NEVs on its roads, and sales are outpacing those of gasoline cars in major cities. However, insurers are struggling to keep pace with the unique risks tied to battery-powered vehicles.
Younger Drivers, Higher Risks
One key factor driving losses is the demographic profile of EV owners. Younger drivers, who make up a significant share of EV buyers in China, are statistically more likely to file claims than traditional car owners. Claims frequency is nearly double that of internal combustion engine (ICE) vehicles, analysts say.
Repairing an EV is also significantly more expensive. Batteries, which account for up to a third of the car’s value, are especially vulnerable to damage from road hazards. Replacing a battery can cost more than fixing the entire remainder of a vehicle.
Additionally, specialized parts such as sensors, chips, and high-voltage systems, are not only costly but often available only through authorized service centers. This dynamic has driven premiums for EVs up by 20% to 100% compared to gasoline-powered cars, yet insurers remain unable to turn a profit.
Regulators Push for Industry Reforms
The losses have prompted intervention from regulators. In early 2025, China issued its first national guidelines for EV and hybrid vehicle insurance. These rules aim to standardize coverage, promote collaboration between automakers and insurers, and address high repair costs.
A major pain point for insurers has been limited access to vehicle data. Automakers collect extensive information on battery performance, driving habits, and system diagnostics, but this data has not been readily shared with insurers. The new framework encourages greater data transparency, which could help insurers refine risk models and set fairer premiums.
The government also launched an online platform, “Easy to Insure,” designed to connect EV owners with insurers. The service has already facilitated coverage for over 500,000 vehicles, valued at nearly 495 billion yuan. While the platform doesn’t guarantee cheaper policies, it ensures drivers cannot be denied basic coverage.
Automakers Enter the Insurance Arena
Despite ongoing losses, EV insurance is widely regarded as a long-term growth market. Analysts expect premiums in the sector to reach 500 billion yuan by 2030, making up over a third of China’s auto insurance industry.
Large insurers such as Ping An, PICC, and China Pacific Insurance currently dominate the market, holding more than 65% share. Some have already reported progress. Ping An, for example, turned its EV insurance business profitable in 2024 by leveraging new tools that identify ride-hailing vehicles and assess repair economics more efficiently.
Meanwhile, automakers themselves are moving into the insurance space. Giants like BYD and Tesla, as well as newcomers such as Xiaomi, are building in-house insurance divisions. Their direct access to vehicle data could give them an edge in risk pricing and customer service, further reshaping the competitive landscape.
