Visual China.
In 2023, the scale of property insurance premiums will continue to stabilize, and protection will continue to increase, adding optimism to the industry's expectations for 2024. Looking ahead, in 2024, the growth of domestic auto sales will drive the rigid demand attribute car insurance through the cycle, especially in the field of new energy vehicle insurance, and it is expected that both quality and quantity will be improved; In the non-motor insurance sector, with the acceleration of product innovation and the continuous optimization of business structure, it may become a new driving force for the development of the property insurance industry.
In terms of underwriting profits, the industry expects that the return of natural disaster losses to a steady state and the continuous promotion of risk reduction are expected to promote the gradual optimization of the loss ratio, while the expense ratio is expected to decline due to the slowdown in competition brought about by the high-pressure regulatory situation.
In 2023, property insurance will continue to stabilize, and the "Matthew effect" will not decrease
A few days ago, the State Administration of Financial Supervision disclosed the unaudited operation of the insurance industry in 2023, and the main types of insurance of property insurance companies have achieved growth, and the property insurance has achieved original insurance premium income of 159 trillion yuan, a year-on-year increase of 673%, the growth rate has slowed down compared with 2022, down 198 percentage points.
In terms of insurance types, agricultural insurance grew the fastest, reaching 1731%, and the original insurance premium scale was 143 billion yuan. Health insurance and liability insurance followed closely behind, with growth rates of 1089% and 1045%。The scale of original insurance premiums for motor insurance reached 867.3 billion yuan, a year-on-year increase of 564%。
The "Matthew effect" is still a prominent feature of the property and casualty insurance industry, with the "old three" accounting for more than 6% of the market share in 2023. PICC P&C achieved an annual premium income of 5,1580.7 billion yuan, a year-on-year increase of about 63%；The premium of Ping An Property Insurance is 3021600 million yuan, a year-on-year increase of about 14%；CPIC's property and casualty insurance premium income grew at a rate of 114%, and the premium scale is 19032.7 billion yuan.
Judging from the industry protection situation in 2023, the insured amount of car insurance is 86468 trillion yuan, a year-on-year increase of 2628%；The sum insured of liability insurance reached 4830 in 202374 trillion yuan, down 1834%；At the same time, the amount of agricultural insurance reached 498 trillion, a year-on-year increase of 915% increase. The total annual compensation expenditure of the industry is 107 trillion yuan, a year-on-year increase of 178%。
From the perspective of underwriting, auto insurance, as the main force of property insurance companies' absolute underwriting profits, will lead to a decline in industry profits in 2023. Behind the decline in underwriting profits, it is closely related to the normalization of vehicle travel in 2023, the impact of climate disasters, and the high loss ratio of new energy vehicle insurance, all of which have made the loss ratio of car insurance higher.
In 2024, new energy vehicle insurance will change, and non-auto insurance may become a new driving force for the industry
Looking ahead to 2024, what trends will the property and casualty insurance industry take?
Dongxing** proposed that property insurance premiums showed steady growth, and the business structure continued to tilt towards non-automobile. The premium of motor insurance is still in demand, and the premium of new energy vehicles is expected to increase with the increase in penetration. Commercial agricultural insurance and health insurance are expected to continue to contribute to non-auto insurance, and the macroeconomic recovery will provide growth momentum for them.
From the perspective of scale, in terms of auto insurance, "the continued growth of production and sales in the automotive industry, the expansion of the floating range of independent pricing coefficients of commercial auto insurance, and the increase in the penetration rate of new energy vehicles are expected to drive up auto insurance premiums", Dongguan ** proposed in the research report.
Auto insurance with rigid demand attributes is expected to rise with the growth of automobile sales and grow steadily through the cycle. According to Xu Haidong, deputy chief engineer of the China Association of China, in 2024, China's total automobile sales are expected to reach 31 million, and it is expected to increase by 3% year-on-year.
In terms of new energy vehicle insurance, according to Cui Dongshu, secretary general of the National Passenger Car Market Information Association, the wholesale volume of new energy passenger vehicles is expected to reach 11 million in 2024, with a net increase of 2.3 million units, a year-on-year increase of 22%. This will effectively drive the development of the new energy vehicle insurance market from the demand side.
However, it is worth noting that due to the high risk rate and high loss ratio of new energy vehicle insurance, many insurance companies have weakened their interest in participating in the layout of new energy vehicle insurance. A few days ago, the regulator issued the "Notice on Effectively Underwriting New Energy Vehicle Insurance" in the industry, which clearly mentions that insurance companies shall not refuse to insure compulsory traffic insurance, and commercial insurance is willing to be fully insured. At the same time, property and casualty insurance companies are required to carry out a comprehensive investigation of the underwriting policies and assessment indicators of new energy vehicle insurance in the system, and shall not adopt unreasonable restrictions and underwriting measures such as "one-size-fits-all" for specific new energy vehicles in terms of system control and underwriting policies, and adjust the unreasonable assessment targets set for new energy vehicle insurance.
From the perspective of the industry, this move is intended to solve the problems of difficulty in insurance application and renewal in the process of new energy vehicle insurance operation, force the development of the industry, reshape and optimize the whole business process, and make efforts in accurate pricing.
On the one hand, the growing market demand for new energy vehicle insurance, and on the other hand, the market guidance for safeguarding consumer rights and interests, it is worth looking forward to what breakthroughs insurance companies will make in the field of new energy vehicle insurance in 2024.
In terms of non-auto insurance, the industry expects that under the guidance of policies and with the guidance of professional supply to guide high-quality demand, non-auto insurance types such as health insurance, accident insurance, and agricultural insurance will release development space, providing important support for the steady development of the property insurance industry.
Recently, the first document was issued, of which 6 mentioned insurance, especially in the field of agricultural insurance, the document proposed to expand the scope of implementation of full cost insurance and planting income insurance policies, to achieve the national coverage of the three major staple grains, the orderly expansion of soybeans, the development of special agricultural products insurance and many other requirements on improving the agricultural insurance system, which is expected to encourage and standardize the promotion of the agricultural insurance industry to achieve high-quality development.
After the comprehensive reform of motor insurance, insurance companies pay more attention to the development opportunities and potential of non-motor insurance, and with the acceleration of product innovation and the continuous optimization of business structure, non-motor insurance may become a new driving force for the development of the property insurance industry. Dongguan ** analyzed in the research report.
In the context of declining investment interest rates, profits will be demanded from the underwriting side
In terms of profitability, it is worth the industry to continue to think about in 2024. In 2023, the industry's underwriting profit will decline significantly, and the comprehensive ratio will show a high trend. Especially in the field of auto insurance, according to industry exchange data, the underwriting profit in the field of auto insurance will be halved in 2023, and only more than 10 of the 64 main companies operating auto insurance will achieve underwriting profitability.
On the one hand, vehicle travel will return to normalization in 2023, and the accident rate will increase significantly compared with 2022; On the other hand, natural disasters have pushed up the industry's loss ratio.
Looking ahead to 2024, is underwriting margin expected to improve?
According to GF**'s analysis, the continuous promotion of natural disaster losses returning to a steady state and risk reduction is expected to promote the gradual optimization of the loss ratio, while the expense ratio is expected to decline due to the slowdown in competition brought about by the high-pressure regulatory situation.
For example, in June 2023, the State Administration of Financial Supervision issued the Notice on Matters Concerning the Regulation of the Order of the Auto Insurance Market, which once again explicitly prohibits the blind fight for scale and share grabbing, emphasizing that it is not allowed to deviate from the actuarial pricing basis and sell auto insurance products below the cost to carry out unfair competition. In September, it was followed again to make clear requirements on the issue of car insurance costs. Under the strong supervision, the auto insurance expense ratio is expected to improve in the future, and the comprehensive cost ratio of auto insurance is also expected to improve as the compensation side gradually becomes normalized.
In the field of non-auto insurance, in the context of years of continuous industry losses, CITIC** expects that the tolerance of insurance companies for non-auto insurance losses will continue to decrease, and the degree of irrational competition in non-auto insurance is expected to decrease. At the same time, it is expected that under the guidance of "risk prevention", the supervision of the non-auto insurance field may be increased in the future, changing the state of continuous vicious competition in the industry.
In addition, in the context of declining investment yields, it may force the property insurance industry to ask for profits from the underwriting side. When looking forward to the performance of property insurance in 2024, CITIC** pointed out that "similar to the life insurance industry, the decline in the industry's investment yield will force insurance companies to ask for profits from the underwriting side, and the essence of strict supervision is to prevent insurance companies from incurring large-scale losses." In the case that it is difficult to significantly improve the return on investment, we expect that market operators will shift from scale and share orientation to benefit orientation. ”
It is worth mentioning that the optimistic earnings estimate is more biased towards large insurance companies, while small and medium-sized insurance companies are trapped by scale and still have considerable profitability difficulties. As mentioned by Sun Ting, a researcher at Haitong**, the leading insurance companies have better business quality, the proportion of self-owned cars with low loss ratios in the auto insurance business is relatively high, the channel rate is controllable, and the profit margin far exceeds that of small and medium-sized insurance companies, and their competitive advantages will become more and more prominent in the second half of the reform.