White Paper on New Energy Vehicle Battery Insurance Innovation

BEIJING – July 7, 2025 – PICC Reinsurance Co., Ltd. (PICC Re), a subsidiary of the People’s Insurance Company (Group) of China (PICC), has released the industry’s first White Paper on New Energy Vehicle (NEV) Power Battery Insurance Innovation.

This landmark document, structured in six chapters, outlines a comprehensive framework under the theme of “Industry Panorama – Risk System – Solutions – Future Trends.” It addresses the evolving NEV battery insurance landscape, offering insights into risks, solutions, and future trends to support China’s booming NEV market, which saw premiums soar to CNY 98 billion ($13.8 billion) in 2023.

The white paper underscores PICC Re’s leadership in addressing the unique challenges of NEV battery insurance through innovative reinsurance solutions.

Industry’s First White Paper on New Energy Vehicle Battery Insurance

White Paper Overview and Key Insights

The white paper provides a detailed analysis of the NEV power battery ecosystem, focusing on risk management and insurance innovation. Its six chapters are:

• Industry Chapter: Offers a panoramic view of the NEV battery industry, highlighting its growth trajectory. China, the global leader in NEV production and sales, saw 7.7 million NEV units sold in 2024, a 35% year-on-year increase, driven by companies like BYD and Tesla China. The chapter identifies trends such as increasing battery energy density and adoption of lithium iron phosphate (LFP) batteries.

  
  

• Risk Chapter: Analyzes core risks, particularly thermal runaway (causing fires or explosions) and capacity degradation (reducing battery lifespan). These risks stem from manufacturing defects, extreme temperatures, or overcharging, with 30% of NEV claims in 2024 linked to battery issues, per industry data.

  
  

• Insurance Chapter: Positions insurance as a “companion assurance” covering key stages: research, production, transportation, and usage. It emphasizes tailored coverage for battery-specific risks, unlike traditional motor insurance.

  
  

• Commercial Chapter: Addresses industry pain points, such as gaps in “three-electric” system (battery, motor, electronic control) coverage, battery recycling, and overseas service. It proposes a direct insurance + reinsurance model to enhance risk-sharing and financial stability.

  
  

• Innovation Chapter: Introduces four innovative solutions:

  1. Parametric Insurance: Triggers payouts based on predefined battery failure metrics (e.g., thermal runaway events).

  2. Battery Lifecycle Coverage: Insures batteries through production, use, and secondary applications like energy storage.

  3. Cross-Border Reinsurance: Supports NEV exports with global risk transfer, critical as 40% of China’s NEVs were exported in 2024.

  4. Data-Driven Underwriting: Leverages IoT and big data for real-time risk assessment, reducing claim disputes.

     
     

• Future Chapter: Predicts that solid-state battery commercialization by 2030 will reshape risk profiles due to higher energy density and reduced thermal runaway risks. It calls for synergy between the NEV and insurance industries to address evolving challenges.

  
  

Impact on the NEV Insurance Market

The white paper is a game-changer for China’s NEV insurance market, which is critical given the sector’s rapid growth. NEV premiums reached CNY 98 billion ($13.8 billion) in 2023, a six-fold increase from 2018, driven by China’s 11.5% share of motor insurance premiums in 2023, up from 2% in 2018. The white paper’s solutions address key challenges:

• Risk Management: By tackling thermal runaway and capacity degradation, insurers can reduce claim rates, which are double those of internal combustion engine vehicles due to battery vulnerabilities like flood

  
  

• Cost Reduction: Parametric and lifecycle coverage could lower premiums by 10–15%, making NEV insurance more affordable and boosting adoption.

  
  

• Global Expansion: Cross-border reinsurance supports China’s NEV exports, with 2.8 million vehicles shipped in 2024, enhancing competitiveness in markets like Europe and Southeast Asia.

  
  

• Industry Collaboration: Partnerships with NEV manufacturers (e.g., BYD’s insurance brokerage acquisition) enable data-driven products, giving insurers a competitive

  
  

The white paper’s focus on innovation aligns with regulatory guidance from the NFRA, which expanded pricing autonomy for NEV insurance in 2024, though smaller insurers struggle with profitability due to high claim costs. PICC Re’s leadership could set industry standards, especially for catastrophe management of battery.

Challenges of New Energy Vehicle Battery Insurance

The NEV insurance market faces significant challenges due to the unique risks associated with electric vehicles. High claim costs, with NEV claims averaging twice those of traditional vehicles, stem from costly battery repairs or replacements, often exceeding CNY 100,000 ($14,000) per incident due to thermal runaway or flood damage.

Data limitations hinder accurate risk pricing, as battery performance data is often proprietary to manufacturers like CATL or BYD. Regulatory gaps also pose issues, as the NFRA’s pricing autonomy for NEV insurance, expanded in 2024, lacks standardized risk models, leading to inconsistent premiums.

Additionally, cross-border complexities arise as NEV exports grow, requiring insurers to navigate diverse regulatory environments. Insurers are responding by: adopting IoT and telematics (e.g., Ping An’s real-time battery monitoring for 20% of NEV policies), partnering with manufacturers for data access (PICC’s collaboration with BYD), developing parametric products to streamline claims (PICC Re’s solution reduces processing time by 30%), and investing in reinsurance to mitigate high-loss risks, with CNY 10 billion in reinsurance premiums for NEVs in 2024.

Impact on the NEV Insurance Market

The white paper is a game-changer for China’s NEV insurance market, which is critical given the sector’s rapid growth. NEV premiums reached CNY 98 billion ($13.8 billion) in 2023, a six-fold increase from 2018, driven by China’s 11.5% share of motor insurance premiums in 2023, up from 2% in 2018. The white paper’s solutions address key challenges:

• Risk Management: By tackling thermal runaway and capacity degradation, insurers can reduce claim rates, which are double those of internal combustion engine vehicles due to battery vulnerabilities like flood damage.

  
  

• Cost Reduction: Parametric and lifecycle coverage could lower premiums by 10–15%, making NEV insurance more affordable and boosting adoption.

  
  

• Global Expansion: Cross-border reinsurance supports China’s NEV exports, with 2.8 million vehicles shipped in 2024, enhancing competitiveness in markets like Europe and Southeast Asia.

  
  

• Industry Collaboration: Partnerships with NEV manufacturers (e.g., BYD’s insurance brokerage acquisition) enable data-driven products, giving insurers a competitive edge.

The white paper’s focus on innovation aligns with regulatory guidance from the NFRA, which expanded pricing autonomy for NEV insurance in 2024, though smaller insurers struggle with profitability due to high claim costs. PICC Re’s leadership could set industry standards, especially for catastrophe management of battery risks.

Current Status of China’s Insurance Market

China’s insurance market is the world’s second-largest, with total premiums of CNY 5.1 trillion ($717 billion) in 2024, driven by life and health insurance growth. The NEV insurance segment is a high-growth area, fueled by government support and consumer demand. Key trends include:

• Digitalization: Insurers like Ping An leverage AI and IoT, with 70% of sales through digital channels in 2024, enhancing NEV policy distribution.

• Regulatory Oversight: The C-ROSS Phase II regime and NFRA’s 2026 product classification rules increase compliance costs, favoring large insurers with robust systems.

• Consolidation: The number of insurers dropped from 229 in 2023 to 218 in 2024, as smaller firms face capital and compliance

• NEV Focus: Major insurers like PICC, Ping An, and CPIC dominate NEV insurance, holding 70% of the market in 2023, with PICC seeing a 60% jump in NEVs

  
  

Comparison of Major Chinese Insurance Companies

Below is a comparison of leading Chinese insurers based on their NEV insurance involvement, financial performance, and market position, using 2024 data:

Metric	PICC	Ping An Insurance	CPIC	China Life
Total Premiums (2024, CNY)	680B	900B	420B	650B
Net Profit (2024, CNY)	24B	141B	28B	110B
NEV Premiums (2023, CNY)	29B (est.)	34B (est.)	20B (est.)	15B (est.)
Market Share (NEV, 2023)	29.6%	34.7%	20.4%	15.3% (est.)
Digital Sales (% of Total)	30%	70%	50%	45%
NEV Insurance Innovation	White paper, parametric coverage	AI-driven underwriting	Battery lifecycle policies	Limited NEV focus
Compliance Framework	Developing	Advanced (AI-driven)	Strong	Advanced
Sales Force Size	0.5M agents	0.9M agents	0.4M agents	1.2M agents

Analysis

• NEV Market Leadership: Ping An leads with 34.7% NEV market share and advanced AI underwriting, leveraging its Smart Training System for agents. PICC follows closely with its white paper and parametric solutions, while CPIC focuses on lifecycle coverage. China Life lags in NEV-specific innovation, prioritizing traditional life insurance.

• Financial Performance: Ping An’s CNY 141 billion net profit and CNY 900 billion premiums reflect its tech-driven efficiency. PICC’s CNY 24 billion profit is lower due to property and casualty focus, but its 60% NEV growth in 2023 signals

• Digitalization: Ping An’s 70% digital sales outpace PICC (30%) and CPIC (50%), giving it an edge in NEV policy distribution. China Life’s 45% digital sales indicate slower adoption.

• Regulatory Readiness: Ping An and China Life have robust compliance frameworks for NFRA’s 2026 rules, while PICC’s developing systems may require investment to meet tiered sales standards.

Outlook and Implications

PICC Re’s white paper sets a benchmark for NEV insurance innovation, addressing critical gaps in battery coverage and supporting China’s NEV market, projected to reach 10 million units sold by 2026. The proposed solutions could reduce claim disputes by 20% and lower premiums, boosting NEV adoption. However, challenges include high claim costs (NEV claims are double those of traditional vehicles) and the need for robust data infrastructure, where smaller insurers lag. The NFRA’s 2026 regulations will further push insurers to adopt data-driven underwriting, favoring leaders like PICC and Ping An

Consult Everbright Actuarial Consulting for Expert Guidance

To explore the implications of PICC Re’s white paper or navigate the NEV insurance market, contact Everbright Actuarial Consulting at info@ebactuary.com . Our team offers tailored risk assessments, compliance strategies, and insights into China’s evolving insurance landscape. Reach out for consultations, educational resources, or customized solutions to align with your risk management goals.