China Insurance Regulatory Commission (CIRC), the industry watchdog, will increase the flexibility of auto insurance premiums in an effort to boost the market, said officials.
Auto insurance is a heavyweight in China's non-life insurance sector, accounting for 60 percent of the total non-life insurance premiums paid, according to Tang Yunxiang, CIRC vice-chairman and general manager, who spoke Thursday at an auto insurance seminar co-organized by the China Insurance Institution and the Korean Samsung Fire and Marine Insurance.
So far, a total of 14.94 million automobiles have been underwritten in China, Tang said.
However, because the immature market had initially suffered from malicious competition between insurers, who employed high commission and low premium rate to lure clients, CIRC last year forced all insurers to adopt uniform insurance policy, clause and premium rate without any variations.
"The auto insurance market has taken an obvious upward trend this year thanks to CIRC's rectification methods," said Pei Guang, director of CIRC's property insurance supervisory division.
However, he said that it is improper to stick to the fixed premium and clause in the long run as different places face different degrees of risks and there are presently no products adapted to certain customer groups.
"That is in opposition to the international practice and has hindered our further development of auto insurance business and prevention of risks," said Jia Haimao, vice-general manager with People's Insurance Company of China's auto insurance department.
The CIRC has perfected the original premium and clause this year and will allow different regions to adopt different premium rates and clauses according to their respective situations, said Pei Guang.
The regional offices of CIRC will be entitled to float the premium rates up and down within 30 percent of the original rate, he said.
As China gets ready to join the World Trade Organization, it is important for the Chinese auto insurance sector to learn advanced technology and management know-how from international counterparts and closely follow the international trend, he said.