Guosen: New energy vehicle insurance enters high-quality competition stage. Data technology and industry integration are key.

Guosen released a research report stating that the new energy vehicle insurance track is transitioning from the initial stage of extensive growth towards a high-quality competition stage centered on technology and ecology. Despite short-term profit pressure, its long-term growth space and strategic value are clear. The bank believes that it is important to focus on the leading investment in data technology by corresponding companies, deep ties with major new energy vehicle manufacturers, and top insurance institutions with a clear advantage and clear path in international layout. Guosen's main points are as follows: Industry cycle view on property insurance: The new energy vehicle insurance of our company has entered the "golden development period" of "rising quantity and price". Under the guidance of the national strategy of "dual carbon" goals and continued policy incentives such as purchase tax exemptions, the market penetration rate of our company's new energy vehicles continues to increase rapidly. By 2024, the proportion of our company's new energy vehicle sales in total new vehicle sales has reached 40.9%, with a retail penetration rate approaching 50%. Its sales growth significantly surpasses traditional fuel vehicles, providing solid native power for the growth of insurance premiums. At the same time, the penetration rate of "Advanced Driver Assistance Systems (ADAS)" exceeding 50% and the popularization of innovative models such as "Usage-Based Insurance (UBI)" are reshaping the risk management and pricing logic of vehicle insurance from a technological perspective, providing key tools for the industry to address cost challenges. The high growth of new energy vehicle insurance is behind the current "high cost, high claims payment" pressure, rooted in the essential differences in risk structure between new energy vehicles and traditional fuel vehicles. The high costs and repair barriers of the "three-electric system" core components - batteries, motors, and controllers, create risks that traditional actuarial models have not fully priced. The introduction of intelligent components makes accident liability determination more complex, while the younger, high-frequency use of vehicle owners leads to higher claim frequencies. The industry's underwriting loss of 5.7 billion yuan in 2024 intuitively demonstrates the deep mismatch between the traditional insurance model and the structural characteristics of new energy vehicles. The industry's profit model urgently needs reconstruction, with risk reduction, eco-integration, and standardisation for international expansion being the core directions to build competitive barriers, highlighting the leading effect. Firstly, in recent years, leading insurance companies such as the "big three" have vigorously developed risk reduction services to strengthen the risk management system, empower business development, and optimize risk control levels. Ping An Property Insurance has accumulated over 10 billion yuan in losses through such technologies; PICC Property & Casualty Insurance, through the "Wanxiang Cloud" platform, provides dynamic risk profiles and warnings, shifting risk control from "after-the-fact claims settlement" to "prevention before the event". Secondly, integration in ecosystems with major manufacturers to solve data silos and repair cost issues. Car manufacturers are deeply involved through setting up or acquiring insurance institutions, while insurance companies engage in strategic cooperation with manufacturers on data sharing, building repair networks, turning the relationship from zero-sum game to symbiosis can win. Finally, following the overseas expansion of the Chinese automotive industry chain and opening up a second growth curve. For example, China's insurance companies are using a model of "front-end cooperation, middle-tier empowerment, back-end reinsurance" to leverage the global expansion of domestic new energy vehicles, exporting the accumulated data and risk control capabilities to overseas markets. Investment suggestions: Insurance companies represented by the "big three" are more likely to convert their current scale and scenario advantages into long-term risk pricing and cost control capabilities, thus traversing the cycle and sharing the industry's structural changes for excess growth. The bank recommends paying attention to the investment opportunities for the structural reconstruction of the insurance business based on the lower-tier property insurance companies, and recommends focusing on PICC P&C, Ping An Insurance, and China Pacific Insurance. Risk warning: Higher maintenance costs for new energy vehicle insurance; COR performance below expectations; intensification of market competition, etc.