Car insurance premiums changed

In 2015, the reform of the commercial auto insurance rate was heading for success.

On March 3, the 21st Century Business Herald reporter was informed that the China Insurance Regulatory Commission’s Property Insurance Supervision Department recently issued the “Deepened Commercial Vehicle Insurance” to the China Insurance Association, various property insurance companies, and insurance regulatory bureaus in Heilongjiang, Shandong, Qingdao, Guangxi, Shaanxi, and Chongqing. The pilot project work plan (exposure draft) (hereinafter referred to as the "plan") of the clause rate management system reform will be required and all units will provide feedback on the relevant opinions before March 5.

As early as the beginning of February, China Insurance Regulatory Commission (CIRC) issued the “Opinions on Deepening the Management Reform of Commercial Vehicle Insurance Terms and Fees Regulations” (hereinafter referred to as “opinions”), and proposed that in May the aforementioned six provinces and cities will formally start trials for the marketization of auto insurance rates. The auto insurance fee reform program, which marks the end of production, will be formally completed. The China Insurance Association subsequently also publicly solicited opinions on the new commercial automobile insurance model clauses.

According to the "Program", since April 1st, the property and casualty insurance companies that operate the auto insurance business will apply to the China Insurance Regulatory Commission for the commercial auto insurance clause rates. The Insurance Regulatory Commission will then organize an on-site acceptance inspection of the pilot regional insurance companies one by one. Whether the system construction, process reform, system debugging, personnel training, etc. meet the relevant requirements of the reform pilot.

After the trial starts, the current auto insurance clause rates in the pilot areas will cease to be used, and insurance companies will switch to the approved new commercial auto insurance clause rates. For companies that fail site acceptance, they will be rectified within a period of time until they meet the requirements. Specific standards for field acceptance will be issued separately.

Strictly control the volatility of auto risk rate

On February 3, Liu Feng, director of the Property and Casualty Department of the China Insurance Regulatory Commission, publicly stated that this commercial vehicle insurance fee reform has a more rational and mature market and improved supervision measures than attempts to cause vicious competition several years ago. Stability is the most crucial element of this reform."

Of course, as the main insurance product of most property insurance companies (in 2014, the national auto insurance premium income accounted for 73.11% of property insurance premium income), auto insurance rate reform has always been a top priority in the commercial auto insurance market reform, but also It is the most complicated one.

From the perspective of the developed insurance market, “model pricing” is a model that is quite mature in application. However, the auto insurance market in China has not been able to introduce and implement this model. One of the key issues is the lack of a comprehensive database of standard models.

The 21st Century Business Herald reporter learned that the China Insurance Association has basically completed the 2014 version of the commercial automobile insurance industry model clauses (draft for comment) and the revision of supporting documents, and formally solicited opinions from the public in early February.

In fact, the revision of the clause reforms and supporting documents is still only the beginning of the commercial auto insurance rate reform. According to the "Program" issued recently, the China Insurance Association also needs to further establish and improve the typical case base for commercial auto insurance, the Expert Evaluation Toolkit for commercial vehicle insurance innovation, and the review committee for innovative articles on commercial auto insurance, in order to develop innovative products for auto insurance. Give exclusivity protection for a certain period of time.

"As far as the present stage is concerned, the basis for the reform of auto insurance rates is still relatively weak. The sharing and publication mechanism of industry information is not perfect, and the reference factors that affect the adjustment of auto insurance rates, such as industry non-reimbursement preferential treatment coefficient and traffic violation coefficient, need to be further adjusted. Optimization," said an insider of TPI.

It is worth noting that the "plan" also mentioned this, saying that "the China Insurance Association needs to establish the auto insurance reference base risk premium and the major rate adjustment factor and other industry reference premium benchmarking calculation, release, adjustment mechanism, The industry-wide commercial vehicle insurance business data dynamically adjusts the auto insurance industry reference benchmark.

In addition, the "Proposal" also put forward further requirements for the China Insurance Association, including: measuring the net risk premium of the commercial automobile insurance industry benchmark, and gradually reflecting the industry of the insured motor vehicle from different dimensions such as the region, model, age, and nature of use. The level of average payoffs; studies the correlation between motor damage insurance premiums and previous annual insurance claims records, traffic violation records, and other important influencing factors, and formulates reference plans for rate adjustments.

In terms of supervision and management, the contents of the “Programme” are more detailed than the “Opinions” issued a few days ago. The specific measures include: conducting a retrospective analysis of the commercial auto insurance rates of all property insurance companies at least once a year, and integrating the commercial auto insurance of the property and casualty insurance companies. The cost rate is directly linked to the minimum capital requirement for solvency.

It is worth mentioning that the China Insurance Regulatory Commission stated in the "Programme" that "as soon as the actual insurer's comprehensive compensation rate, comprehensive expense rate and other operational indicators of the auto insurance company are found to be greater than the expected indicators assumed in the previous auto insurance rate actuarial report In particular, if the annual comprehensive cost rate increase exceeds the three-year average change rate of the company's comprehensive cost rate and does not take the initiative to adjust, it may order the property and casualty insurance company to deactivate the original auto insurance rate and amend the deadline; if the circumstances are serious, it may be prohibited within a certain period of time. It declares new auto insurance rates."

Huatai Securities issued a research report a few days ago, saying that "the trial reform of auto insurance fees is conducive to concentration of the industry," and pointed out that "the medium and long-term will benefit large insurance companies. The advantages of the capital strength and sales expenses of large insurance companies will become even more prominent, and market concentration will further increase. ". In addition, according to statistics from Changjiang Securities, the market share of motor insurance for the six provinces and cities in this trial totaled about 16.8%.

Increased institutional autonomy

“The original intention of the auto insurance insurance reform is to allow property and casualty companies to have more flexibility in terms of pricing and terms based on their claims experience. According to the consultation draft issued recently, regulators have given institutional rates adjustments and pricing. A considerable amount of autonomy," said the aforementioned Taiping P & C insurance company.

The "plan" shows that property and casualty companies can choose to use the commercial automobile insurance industry model terms or independently develop innovative commercial vehicle insurance terms, the same property insurance company can use both model clauses and innovative terms.

Allianz Insurance COO Song Xuanbi once wrote that according to the auto insurance fee reform program, all the changes are almost directly reflected in the changes in the premium calculation formula: premium = [benchmark pure risk premium / (1-additional expense rate)] x rate Adjustment coefficient. That is, the commercial vehicle insurance rate will consist of three parts: the benchmark pure risk premium, the benchmark additional expense, and the rate adjustment factor.

Regarding the determination of the rate, the “Proposal” mentioned in the “Proposal”: “All property insurance companies will independently calculate the benchmark additional cost rate of commercial auto insurance, which can in principle be based on the company’s actual cost of commercial auto insurance in the last three years and the industry’s average cost level. Measure its cost rate."

As the most critical factor affecting the level of premiums, the rate adjustment factor includes four subdivision factors: no compensation special treatment and previous year's compensation record (NCD), traffic violation coefficient, channel coefficient and autonomous pricing coefficient.

Among them, the traffic violation coefficient is difficult to fully use in a short period of time, NCD has a certain industry commonality, so the channel coefficient and the self-nuclear insurance factor will be the two impact factors that reflect the greatest difference in individual auto insurance business of the property insurer.

It is worth noting that the "Programme" stated that if property and casualty insurance companies choose to use the commercial automobile insurance model regulations, they can independently formulate a "nuclear insurance factor" and "channel factor" rate adjustment plan within a range of ± 15%. If it exceeds the scope of self-adjustment provided by the CIRC, it shall be separately submitted to the CIRC for approval.

“We need to leave the market and institutions with space for self-underwriting. The boundaries between good and bad business are more ambiguous. Therefore, the requirements for corporate risk screening ability are higher.” Ding Peng, Director of the Actuarial Division of Insurance Supervision Department of China Insurance Regulatory Commission This goes without saying.

After the property and casualty insurance company has completed the formulation of the terms and rates, it must submit a timely approval to the regulatory agency. The "plan" mentioned that in addition to actuarial expectations and major operational deviations and other reasons, in principle, property insurance companies adjust the rate of their auto insurance clauses shall not exceed the frequency of six months.

It is worth noting that if the important indicators such as expected comprehensive loss ratio, expected comprehensive cost ratio and expected comprehensive cost ratio in the car insurance company's auto insurance rate actuarial report deviate significantly from the actual operating results, the original commercial vehicle insurance fee shall be promptly paid. The rate is adjusted and re-sent to the CIRC for review.