This is according to GlobalData, which also stated that the motor insurance industry growth in China is expected to peak at 6.1% in 2023.
Also, the growth will be supported by increasing demand for new energy vehicles (NEVs) and easier regulatory reforms to increase the pricing cap for commercial motor insurance.
According to the China Association of Automobile Manufacturers (CAAM), total vehicle sales recorded 8% growth during January-August 2023 year-on-year.
In addition, insurers’ premium collections are also expected to benefit from higher premium prices for NEVs.
Typically, NEV insurance premiums cost around 20% higher than internal combustion engine vehicles. NEV sales accounted for 29.5% of the total vehicle sales during January-August 2023 and recorded an increase of 39.2%, as compared to the same period in the previous year, according to data from CAAM.
To promote the sale of NEVs, in June 2023, the Chinese government extended the ongoing subsidy for NEVs until 2027. The extended policy allows new NEVs bought in China until December 31, 2025, to receive a 10% purchase tax exemption of up to CNY30,000.
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Furthermore, from January 1 2026 to December 31 2027, the exemption will be halved.
Sravani Ampabathina, insurance analyst at GlobalData, said: “Motor insurance in China is rebounding after experiencing volatilities during 2018-21, arising from depressed economic conditions, COVID-19, supply chain issues, and regulatory challenges that lowered premium prices. The situation recovered in 2022 with an increase in vehicle sales that has continued in 2023.”