Motor Insurance Services

Motor insurance services (also known as auto insurance services) refer to commercial services where motor vehicles serve as the insurance subject matter, offering financial compensation for bodily injury, loss of life, or property damage resulting from natural disasters or accidental mishaps. As a core branch of general property insurance, motor insurance transfers and distributes potential losses faced by vehicle owners across society via risk-pooling mechanisms, meeting statutory mandatory requirements whilst providing motorists with comprehensive risk protection.

Key Coverage Types

The motor insurance service framework is primarily divided into two main categories: compulsory insurance and commercial insurance.

Compulsory Motor Vehicle Traffic Accident Liability Insurance is a statutory policy enforced under unified national regulations, designed to indemnify third-party victims (excluding vehicle occupants and the insured) for bodily injury, death, and property damage arising from road traffic accidents involving the insured vehicle.

Commercial insurance comprises primary policies and supplementary endorsements/riders. Primary coverages include own-damage cover (insuring against physical loss or damage to the insured vehicle caused by natural disasters or accidents), third-party liability cover (indemnifying against third-party bodily injury, death, or property damage caused by accidental incidents), and passenger/driver liability cover. Supplementary riders cover total vehicle theft, standalone windscreen damage, spontaneous combustion, and waiver of deductible, which motorists can tailor to their specific driving needs.

Market Scale

Motor insurance constitutes the largest non-life insurance sector in China. In 2024, motor insurance gross written premiums exceeded RMB 913 billion, representing more than 54% of total non-life insurance premium revenue. In 2025, total written premiums across the industry reached approximately RMB 996.37 billion, reflecting a year-on-year growth of 2.99%. Globally, the motor insurance market reached RMB 4.3721 trillion in 2025 and is projected to expand to RMB 6.8005 trillion by 2032, recording a compound annual growth rate (CAGR) of 6.6%.

The comprehensive motor insurance reform initiated in 2020 initially triggered a reduction in premium rates, driving the market-wide combined ratio up to 101% in 2021 and leading to underwriting losses. The market embarked on a steady recovery from 2022 onwards, posting a premium CAGR of 5.5% between 2022 and 2024—broadly matching the growth pace of the total vehicle parc—whilst the overall combined ratio improved to 98.1%.

New Energy Vehicle (NEV) Insurance

The rapid surge in the new energy vehicle (NEV) parc has fundamentally reshaped the motor insurance landscape. In 2024, NEV sales accounted for approximately 48% of total new vehicle sales, with NEV insurance premiums (inclusive of compulsory and commercial policies) hitting RMB 140.9 billion, representing 15.4% of total motor insurance premiums. In 2025, written premiums for commercial NEV insurance stood at roughly RMB 157.61 billion, up 33.88% year-on-year, pushing total NEV insurance premium income to RMB 190 billion, which made up 20.19% of all motor insurance premiums. By 2030, the share of NEV insurance is forecast to climb to 37%.

Nevertheless, the NEV insurance segment grapples with a dual dilemma where motorists lament steep premiums while insurers struggle with underwriting losses. In 2024, the average combined operating ratio for NEV insurance stood at around 107%, generating underwriting losses of RMB 5.7 billion, with the average risk cost per vehicle reaching 2.2 times that of conventional internal combustion engine (ICE) vehicles. This elevated claims ratio is primarily driven by higher accident frequencies, costly high-voltage battery repairs, and an aftermarket repair ecosystem that is still maturing. According to industry data, the combined ratio for NEV insurance fell by 1.3 percentage points year-on-year in 2025, trimming losses by RMB 100 million, as leading insurers began turning an underwriting profit.

On the regulatory front, the National Financial Regulatory Administration and three other ministries jointly released the *Guiding Opinions on Deepening Reform, Strengthening Regulation, and Promoting the High-Quality Development of New Energy Vehicle Insurance* in early 2025, advocating innovative avenues such as battery-body separated insurance models. At the industry level, the Insurance Association of China teamed up with the Shanghai Insurance Exchange to establish an inclusive motor insurance platform, introducing a risk-sharing mechanism for high-loss portfolios. Municipalities such as Beijing have taken the initiative to engineer bespoke insurance products for intelligent connected vehicles (ICVs), exploring novel underwriting frameworks tailored to smart driving systems.

Digital Transformation

Digital technologies and the internet are fundamentally revamping motor insurance delivery. Ant Insurance launched "joint pricing" algorithms blending driver-behavioural metrics with vehicle-specific data, trimming the combined operating ratio of partner insurers by an average of 3 percentage points; Tencent WeSure brought on board over 13 prominent insurers to deliver online multi-quote comparisons, registering a first-time quotation success rate above 90%. In 2025, online motor insurance penetration was recorded at just 5.2%, highlighting vast headroom for further digital integration.

Technological adoption in claims administration has delivered tangible gains. AI loss adjustment and remote video inspection tools have slashed turnaround times for claims below RM10,000 down to as quick as 13.3 minutes, with automated damage assessment taking as little as 116 seconds. The motor insurance arena is pivoting away from destructive price wars toward a contest of service quality and intelligent capabilities, where dynamic, risk-differentiated pricing models reward careful motorists with lower premiums.

Looking ahead, the structural transition of motor insurance towards emerging, eco-friendly, and intelligent automotive domains will continue to gather pace, with new energy and intelligent connected vehicle insurance acting as the primary growth catalysts for the sector.