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Shanghai releases new policies for commercial car insurance
Online Edition
Shanghai will allow insurance companies greater freedom in setting commercial car insurance rates for clients on Thursday as the insurance regulator rolls out market reforms on car insurance pricing.
The new pricing rules will be based on four factors including clients’ compensation records, violation of traffic rules, insurance companies’ own risk assessment on the client, and the costs of sales through various channels, the Shanghai Bureau of China Insurance Regulatory Commission said today.
Insurers in Shanghai will be allowed to cut 40 percent off the standard rate if policy holder has not claimed compensation in the past three years.
Drivers are also eligible for another 10 percent off the standard rate if they haven’t broken any traffic rules in the past year.
But the rates can be more than doubled for drivers with frequent compensation and violation of traffic rules.
Besides, insurance companies can cut or raise 15 percent on each side of the standard rates based on the companies’ risk assessment and the sales channels.
Under the new rules, policy holders can get as much as 61 percent off the standard rate while previously insurers are allowed to offer as much as 30 percent off the standard.
The new standard rate will be set according to car models while previously the standard rate is based on car prices.
“The reform will slightly lower car insurance premium in general for drivers in Shanghai, and coverage of the commercial insurance will expand,” said Shan Shufeng, head of the non-life Insurance Supervision Division with the Shanghai Bureau of CIRC. “Rates for good drivers are most likely to fall, though for individuals the situation still based on the car model.”
Shanghai will be among the third batch of regions, including Beijing, Shenzhen, and Jiangsu Province that roll out market reforms of commercial car insurance rates.
The CIRC started the reform in June last year to allow greater competition on the car insurance market.
Official data by the end of the first quarter showed that average commercial car insurance rate fell 7.69 percent for the first batch of areas and 6.64 percent for the second batch that was included in the reform at the beginning this year.
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