Regulatory efforts continue to escalate
The determination of the regulatory authorities to rectify the chaos in the auto insurance market can be seen in the above-mentioned penalties.
In the process of promoting the supervision of the auto insurance market by the regulatory authorities, the implementation of “reporting for reporting” plays a key role. In July last year, the Banking Regulatory Commission issued the "Notice on the Relevant Requirements for the Supervision of Commercial Auto Insurance Rates" (hereinafter referred to as "No. 57 Document"), requiring all property insurance companies to submit in various regions except Guangxi, Shaanxi and Qinghai. In the case of the commercial auto insurance rate plan, the average usage of the new car service rate discount factor and the value range and usage rules of the handling fee shall be reported. The handling fee here refers to the property insurance company.InsuranceAll fees paid by intermediaries and individual agents (marketers), including fees, service fees, promotion fees, remuneration, performance, bonuses, commissions, etc. According to the requirements of Circular 57, the value range and usage rules of the new vehicle business fee shall be separately listed.InsuranceThe actual implementation of the company should be consistent with it, which is what the industry calls "reporting for reporting." Since August 1, 2018, property insurance companies have begun to implement "reporting for reporting."
In the face of the long-standing auto insurance market, the “combination boxing” played by the regulatory authorities does not stop there. In January this year, the China Insurance Regulatory Commission issued the "Notice on Further Strengthening the Relevant Matters Concerning the Supervision of Auto Insurance" (hereinafter referred to as the "Notice"), emphasizing that in the process of using auto insurance clauses and rates, all property insurance companies are prohibited from unauthorized modification or Modify the terms and rates in disguise; give or to promise to the insured, beInsurancepeopleInsurancecontractInterests other than the agreed disguise break through the rate of approval rate; through the imaginary other fees, the handling fee is disguised to break through the approval rate; the new car business fails to use the approved rate according to the regulations.
In the recent letter on "Continuing to increase the related issues of the chaos in the auto insurance market, the China Insurance Regulatory Commission also recommended that the local insurance regulatory bureaus increase theInsuranceThe supervision of intermediaries. For verificationInsuranceInstitutional violations of laws and regulations involve violations of laws and regulations by relevant intermediaries (including auto dealers and after-sales service providers, such as forced sales of auto insurance), and may be ordered to correct, fine, ban, confiscate illegal proceeds until the business is revoked according to actual conditions. Regulatory measures such as permits.
Chaos refraction industry dilemma
Judging from the result of the punishment, the other expenses are set aside for the fee, given or promised.InsuranceThe unrealistic benefits and expense data outside the contract are more serious problems in the current auto insurance market. The person in charge of the relevant department of the Banking Insurance Regulatory Commission has previously stated that the promulgation of the "Notice" is intended to solve the two outstanding problems of not using the auto insurance clause rate and the unrealistic financial data of the business.
Such violations are directed at the local regulatory authorities.InsuranceThe fines issued by the agency are clearly shown. An administrative penalty decision issued by Shanxi Banking and Insurance Bureau shows that a certain property insurance company Jinzhong Zhongzhi passed the following expenses in the “business expenses-business promotion fee” financial accounting subject, and was given to the insured and wasInsurancepeopleInsuranceOther benefits than the contract. At the same time, the company also compiled false information, and the distribution plan and distribution list used in the related expense bookkeeping under the above-mentioned accounting subjects were inconsistent with the actual distribution plan and method list.
In response to this, the Banking Regulatory Commission also previously requested in the Notice, the propertyInsuranceThe company shall strengthen the management of the authenticity of business financial data, ensure that all operating costs are real and timely accounted for. It is strictly forbidden to take the handling fee by means of direct business, such as intermediary business, and to collect fees by means of virtual business and management fees. Violation of the liability reserve to adjust the operating results, and to adjust the operating results by artificially deferred expenses.
Under the background of continuously strengthening supervision and promoting self-discipline in the industry, why is the chaos in the auto insurance market still difficult to eradicate? The vicious competition caused by the abnormal development of the auto insurance market may be an important reason behind it.
The data shows that in 2018, the industry's auto insurance underwriting profit decreased by 85.75% year-on-year, and the underwriting profit margin was only 0.14%. At the same time that profits have fallen sharply, the overall cost ratio of auto insurance business has been rising. Relevant data show that in 2018, the comprehensive cost ratio of the auto insurance industry was 99.86%, and the comprehensive expense ratio was 43.16%. In 2018, among the 86 property and casualty insurance companies included in the statistics, a total of 59 companies had a combined cost ratio of more than 100%, accounting for approximately 68.6%.
Huachuang SecuritiesAnalystHong Jinping believes that the main reasons for the current vicious competition in the auto insurance market are twofold: First, the competition among the head insurance companies is fierce. The small and medium-sized companies have to follow up to maintain market share, but compared with the large-scale insurance companies, the small and medium-sized insurance companies have much room for price cuts. Limited, dilemma; Second, the autonomy of auto insurance products is serious, and the technology of risk pricing needs further improvement. At present, most insurance companies have no clear strategic positioning suitable for their own development, and they can only compete for market share through means of cost input.
Promoting reform is the way out
It is clear that the auto insurance supervision will continue to upgrade in the future. With the rectification of market chaos under strict supervision, the loss caused by excessive cost competition in the auto insurance market is also expected to improve. But what is more crucial is how to get out of the auto insurance supervision cycle of “getting to die, letting go and messing up” to achieve healthy and sustainable development of the auto insurance market. Some professionals said that they should be more determined to further promote the reform of commercial vehicle fees, thus eliminatingInsuranceThe short-term momentum of the company. Previously, the person in charge of the relevant departments of the China Insurance Regulatory Commission also said that the rectification of the auto insurance market is intended to create a good market environment for the next commercial auto insurance reform.
Last year, a new round of commercial vehicle fee reform has been launched. The regulatory authorities first adjusted the independent underwriting coefficient and the independent channel coefficient of Sichuan, Shanxi, Fujian, Shandong, Henan, Xiamen, Xinjiang and other regions, and then released the independent pricing rights of Guangxi, Shaanxi and Qinghai.
From the original intention of the supervision department to promote the reform of commercial vehicle fees, it is to let the market players pass the rightInsuranceTarget and risk understanding and judgment independently determine product prices, form a market-based price mechanism to increase the loss ratio, and forceInsuranceThe company compresses market costs and improves its operational efficiency. The current market development seems to run counter to the original intention.
However, from the international experience of commercial vehicle fee change, the process of advancement is often accompanied by pain. The auto insurance market in Germany, Japan and other countries also experienced vicious competition in the process of auto insurance fee reform. The average car premium decreased, the payout ratio increased, and the market suffered a loss. Ping An SecuritiesResearch reportThe analysis shows that in the process of progressive commercial vehicle fee reform, the decline in premiums will not be very obvious, and the market competition is fierce, resulting in a higher overall industry cost ratio.
This also shows to a certain extent that in the market where pricing is liberalized, in the face of vicious competition in the market, flexible regulatory measures are indispensable. Next, further reform of commercial vehicle fees will require various measures to strengthen auto insurance supervision to protect the escort.
(Article source: China Financial News Network)