China's EV Insurance Faces a Reckoning: How Insurers Lost Billions While the Market Boomed

The numbers tell a brutal story. In 2024, China’s EV insurance sector hemorrhaged 5.7 billion yuan ($802 million) despite collecting 141 billion yuan in premiums. It’s a paradox that exposes a fundamental mismatch: the world’s largest electric vehicle market has outrun the insurance industry’s ability to price risk.

With over 20 million new energy vehicles already on Chinese roads and EVs now outselling gasoline cars in major cities, the insurance system designed for traditional combustion engines is cracking under the pressure. The problem runs deeper than just volume.

Why EV Insurance Claims Are Spiraling Out of Control

Electric vehicle owners—typically younger and less experienced than traditional car drivers—file insurance claims at roughly double the rate of their gasoline-driving counterparts. But the real cost bomb lies in repairs.

Battery replacement alone accounts for about a third of an EV’s total value, and these battery packs sit vulnerable beneath the vehicle floor. A minor collision with a speed bump can trigger catastrophic damage. A new battery isn’t just expensive; it can cost more to replace than fixing every other component combined. Add to this the specialized sensors, chips, and proprietary components that only authorized service centers can touch—often at premium prices—and repair bills quickly spiral out of control.

The data tells the story starkly: insurers couldn’t distinguish between vehicle brands, models, and actual loss patterns because they lacked access to the rich diagnostic data that EV manufacturers were collecting but hoarding.

The Regulatory Breakthrough: Data Sharing and Market Repair

China’s regulators recognized the crisis and moved quickly. In January 2025, the government rolled out its first comprehensive insurance guidance for EVs and plug-in hybrids, marking a turning point.

The centerpiece? Mandatory data sharing. Automakers now must open access to battery health, driving pattern, and usage data—the critical inputs needed for accurate risk pricing. Simultaneously, authorities launched “Easy to Insure,” an online platform that has already channeled coverage to over 500,000 vehicles worth nearly 495 billion yuan in combined value.

Law enforcement is also pressuring manufacturers and suppliers to make replacement parts more transparent and affordable, tackling the supply chain bottleneck that had been driving up costs.

The Trillion-Yuan Prize Reshaping the Industry

Despite current losses, the EV insurance market represents a fortress of future opportunity. Industry analysts project the sector will hit 500 billion yuan in premiums by 2030—a threshold that would capture over a third of China’s entire auto insurance market.

The big three—Ping An, PICC, and China Pacific Insurance—control more than 65% of current EV insurance. But the landscape is shifting. Ping An achieved profitability in its EV business during 2024 by deploying AI-powered tools to identify ride-hailing patterns and model repair economics. Competitors are experimenting with usage-based pricing models that adjust premiums based on real-time driving telemetry.

Meanwhile, automakers are moving vertically. BYD, Tesla, and newcomers like Xiaomi are launching their own insurance arms, betting that controlling the entire value chain—from vehicle data to claims processing—could unlock a sustainable competitive advantage.

The insurance sector won’t break even for another two to three years, but the prize at stake suggests this painful transition is just the price of entry into one of the world’s most dynamic markets.