China’s EV Insurance Crisis Exposes Costly Repair Realities

China's electric vehicle insurance sector is hemorrhaging cash as soaring repair costs outpace premium income. Insurers face billions in annual losses despite the country's dominant position in global EV adoption, with claims frequency doubling traditional auto policies.

The root lies in outdated risk assessment models failing to account for EV-specific vulnerabilities. Battery packs—comprising a third of vehicle value—are particularly prone to damage from road hazards. Replacement costs often exceed all other repair expenses combined.

Specialized components like sensors and chips compound the problem, requiring expensive OEM parts and certified technicians. This structural mismatch threatens to stall insurance availability just as EV sales overtake combustion engines in major Chinese cities.