2025 New Energy Vehicle Insurance Premiums Up 30% YoY: Higher Repair Costs Than Gas Cars and More Frequent Smart-Driving Accidents

Fast Technology reported on January 31 that China’s auto insurance industry recorded approximately RMB 996.37 billion in written premiums in 2025 (including both commercial auto insurance and mandatory traffic liability insurance), representing a 2.99% year-on-year increase. Within that total, written premiums for new energy vehicle (NEV) commercial auto insurance reached about RMB 157.61 billion, jumping 33.88% YoY. Paid claims for NEV commercial auto insurance totaled roughly RMB 79.92 billion, up 36.09% from the prior year.

From a growth perspective, NEV insurance has clearly become the engine of expansion across the broader auto insurance market. Its premium growth rate far outpaced the overall industry, highlighting how strongly NEVs are reshaping insurers’ portfolios.

This trend aligns with the broader market reality. China’s total vehicle sales reached 34.40 million units last year, up 9.4% YoY. NEV sales hit 16.49 million units, rising 28.2% YoY, and NEVs accounted for more than 50% of domestic new-car sales—an important milestone for the industry’s transition.

NEVs also show a higher commercial insurance penetration rate than traditional internal combustion engine vehicles. A key driver is risk transfer: repair costs for NEVs are often higher, giving owners a stronger incentive to rely on insurance coverage rather than absorb potential losses out of pocket.

Industry observers have previously noted that NEVs can experience claim incidence rates roughly 70% higher than gasoline vehicles, with loss ratios also around 10 percentage points higher. Contributing factors include a higher share of younger drivers (who may be more prone to aggressive driving), a learning curve around smart-driving features that can lead to accidents when drivers over-rely on the systems, and the use of some vehicles in higher-risk scenarios such as ride-hailing.

Repair economics further amplify the pressure. NEV maintenance can be significantly more expensive due to high-cost components like batteries and LiDAR sensors. Even minor battery damage may require full pack replacement, with single repairs potentially reaching tens of thousands of yuan. Replacing a single LiDAR unit can cost more than RMB 20,000.

In addition, some automakers’ integrated design approaches can limit repairability—turning what might have been a fix into a full part replacement. This “replace rather than repair” dynamic pushes claim costs higher and, in turn, reinforces the upward pressure on NEV insurance premiums.