Insurance Regulatory Commission: Deepen the reform of commercial auto insurance, consumer auto insurance premiums can be reduced by another 20%.

On June 9, according to the China News Service, in order to further release the dividends of the reform of the commercial vehicle insurance premium rate management system (hereinafter referred to as "commercial vehicle insurance reform"), the China Insurance Regulatory Commission recently decided to further expand the pricing autonomy of insurance companies and lower the lower limit of the floating coefficient for commercial vehicle insurance rates, using market-oriented means to further reduce commercial vehicle insurance rates and alleviate the premium burden on consumers.

From June 2015 to June 2016, the commercial vehicle insurance reform was implemented in three batches across the country. The reform is based on protecting consumer interests and steadily establishing a market-oriented mechanism for forming commercial vehicle insurance premium rates. The reform mainly includes the following aspects:

First, revise the demonstration clauses for commercial vehicle insurance. The new comprehensive demonstration clauses for commercial vehicle insurance expand the scope of coverage, incorporating five additional liability coverages from the original clauses, personal injury to family members, and natural disaster liabilities such as typhoons and hail into the main liability coverage. The new clauses simplify the claims process, add agreements for subrogation in case of vehicle damage, strengthen the obligation of insurance companies to explain, and reduce subsequent claims disputes and litigation. The new system encourages insurance companies to innovate clauses. Innovative clauses such as "motor vehicle key loss or damage compensation insurance" and "motor vehicle oil pollution liability insurance" have already been approved. In addition, new industry demonstration clauses such as "comprehensive commercial insurance demonstration clauses for motor vehicles going abroad" and "doubling of statutory holiday limits for motor vehicle third-party liability insurance" have been released, enriching the content of commercial vehicle insurance clauses and providing consumers with a wider variety of product choices.

Second, improve the pricing methods for commercial vehicle insurance. Implement model-based pricing, changing the determination of vehicle damage insurance premiums from a single basis of insured amount or new car purchase price to a comprehensive consideration of various risk factors such as vehicle value, safety, and repair economy for a specific model, solving the long-standing public issue of "high premiums with low compensation," and promoting improvements in automotive safety and ease of repair. Establish a "reward for good and punishment for bad" mechanism linking insurance rates with risk levels to encourage cautious driving among car owners and enhance traffic safety levels. Granting pricing autonomy to insurance companies has promoted market competition in commercial vehicle insurance rates and increased market activity.

Nearly a year after the full implementation of the commercial vehicle insurance reform, the average premium per vehicle has decreased by 5.3% compared to before the reform, significantly enhancing consumer satisfaction. The auto insurance market is stable and improving, with enhanced industry management capabilities and strengthened social management functions of auto insurance. After completing the pilot work in the previous phase of reform, most regions have seen low-risk drivers with good driving habits enjoy a minimum discount rate for commercial vehicle insurance reduced from 0.7 before reform to 0.4335.

The China Insurance Regulatory Commission pointed out that after lowering the lower limit of the floating coefficient for commercial vehicle insurance rates this time, based on preliminary industry calculations, the minimum discount rate will be further reduced to 0.3825, with some regions as low as 0.3375 (meaning that car owners with good driving habits and safety records may see their premiums reduced by about 20% when insured with a financially stable insurance company), genuinely benefiting consumers. After this round of reform, the compensation rate for commercial vehicle insurance in the insurance industry may increase by 3.6 percentage points.

In the next step, the China Insurance Regulatory Commission will strengthen retrospective analysis of indicators such as comprehensive cost ratio, comprehensive expense ratio, and unallocated claims reserve transfer difference ratio for auto insurance companies, crack down on various illegal issues such as market violations and fraudulent charges, and actively promote solutions to difficulties in auto insurance claims. Following principles that combine both symptomatic treatment and root cause resolution, addressing both prevention and control through multiple approaches and comprehensive measures, we will actively and prudently deepen reforms to effectively safeguard consumers' legitimate rights and interests and promote sustained stable development in the auto insurance market.