China's compulsory auto insurance covered 386 mln vehicles in 2025, claims up 11.6%

September 24 — Data released by the National Financial Regulatory Administration (NFRA) shows that in 2025, the coverage of Compulsory Traffic Accident Liability Insurance (commonly known as Jiaoqiangxian) continued to expand. The number of insured motor vehicles reached 386 million, up 3.8% year-on-year. Among them, insured automobiles totaled 347 million, an increase of 3.9%.

Key Financial Indicators

• Total coverage amount: 76.8 trillion yuan, up 3.4% year-on-year
• Claim payouts: 252.4 billion yuan, up 11.6% year-on-year, reflecting a significantly enhanced role in safeguarding livelihoods
• Premium income: 285.2 billion yuan, up 5.2% year-on-year
• Average premium per vehicle: 762.1 yuan, down 0.1% year-on-year

In 2025, the compulsory traffic insurance segment recorded an underwriting loss of 29.6 billion yuan, offset by 6.6 billion yuan in investment income.

Claim Payouts Rise 11.6%

According to NFRA data, influenced by factors such as higher compensation standards for personal injury claims and an increased share of new energy vehicles (NEVs), the compulsory traffic insurance business posted an operating loss of 23 billion yuan in 2025. Meanwhile, the insurance industry continued to strengthen regulation, curb disorderly competition, and promote cost reduction and quality improvement. From January to August 2026, the industry's comprehensive cost ratio for auto insurance fell to 95.8%, indicating ongoing improvements in operational management.

Claim payouts for the year totaled 252.4 billion yuan, up 11.6% year-on-year.

Five Factors Driving Rising Payout Costs

At a press conference on the 2025 compulsory traffic insurance operating results held by the Insurance Association of China on September 24, Yu Fei, Assistant President of China Life Property & Casualty Insurance, responded to media questions. He stated that claim costs directly affect the operating results of compulsory traffic insurance. In his view, the sustained rise in claim costs in 2025 is a common challenge facing the industry and the result of multiple objective factors. These are reflected in five main areas:

1. Increased Vehicle Usage Intensity

According to the 2025 Transportation Development Statistical Bulletin issued by the Ministry of Transport:

• Road freight volume: 43.288 billion tons, up 3.4% year-on-year
• Road freight turnover: 7.9511 trillion ton-kilometers, up 3.5%
• Road passenger flow: 61.226 billion person-trips, up 3.3%

Higher vehicle usage frequency directly led to an increase in the claim frequency for compulsory traffic insurance. In 2025, the number of claims filed reached 51.359 million, up 7.3% year-on-year. The growth in claim volume is a fundamental factor driving up payout costs.

2. Higher Personal Injury Compensation Standards

The insurance industry has implemented regulatory requirements to unify compensation standards for urban and rural residents in personal injury cases. Compensation for disability, death, and dependents' living expenses has been revised from differentiated urban-rural standards to a unified urban resident standard, leading to year-on-year increases in personal injury compensation amounts. In 2025, the national per capita disposable income reached 43,377 yuan, a nominal increase of 5.0% year-on-year, pushing up death and disability compensation standards.

3. Structural Rise in Medical Costs

Medical expenses for traffic accident victims have been rising steadily due to multiple factors, including advances in medical technology, drug and consumable prices, and an increase in diagnostic tests. As the first line of financial protection for traffic accident victims, the increase in medical expenses directly translates into higher claim costs for compulsory traffic insurance.

4. Rapid Growth in NEV Ownership

In 2025, the industry insured 43.58 million NEVs, accounting for 12.1% of all insured motor vehicles, up from 8.9% in 2024. According to payout data for NEV insurance in 2025 released by the China Association of Actuaries and the China Banking and Insurance Information Technology Management Co., NEVs exhibit "two highs": higher claim frequency and higher repair costs. The overall NEV insurance business remains in a loss-making range.

5. "Visibility Effect" from Improved Claims Services

In recent years, the industry has continuously optimized claims service experiences, offering victims upgraded services such as hospital green channels and full advance payments. In addition, as the coverage of police-insurance joint rapid claims processing expands, some cases that previously went unreported or unclaimed due to cumbersome procedures have now entered the normal claims channel. While enhancing consumer satisfaction, this has objectively made payout data more complete and claim expenditures more adequate.

Expert Analysis: Structural and Trend-Driven Gap

Long Ge, Deputy Director of the Innovation and Risk Management Research Center at the University of International Business and Economics, told National Business Daily that while the 11.6% year-on-year increase in claim payouts versus the 5.2% increase in premiums appears to show a significant "scissors gap," the rate adjustment mechanism must be considered. Safe drivers and those with no at-fault accidents for years enjoy premium discounts, while premium increases for vehicles with claims are limited (the floating range for compulsory traffic insurance is relatively narrow). Combined with two background factors—rising personal injury compensation standards and an expanding base of insured vehicles leading to more claims—the faster growth of payouts relative to premiums is structural and trend-driven. This, he argued, demonstrates that compulsory traffic insurance is paying out what it should and providing the necessary safety net, with funds being used where they are most needed.

Unified and Standardized Online Insurance Platform

The insurance industry has actively improved auto insurance claims services, launched the "Auto Insurance Easy Purchase" platform, deepened police-insurance collaboration, enhanced traffic safety governance, and strengthened the safety net function of the rescue fund, fully leveraging the industry's role as an economic shock absorber and social stabilizer.

Under the guidance of the NFRA, the Insurance Association of China guided property insurers to establish a high-loss risk-sharing mechanism. In January 2025, the "Auto Insurance Easy Purchase" platform, built and operated by the Shanghai Insurance Exchange, was launched. Xue Chunfang, Deputy General Manager of the Shanghai Insurance Exchange, outlined the platform's achievements:

1. People-Oriented, Unified Insurance Services

The platform serves 36 regions nationwide and has onboarded 37 property insurers. Operations are standardized and transparent, with no intermediaries involved in the entire insurance process and no intermediary fees charged. By the end of 2025, the platform had registered over 1.63 million users, facilitated insurance for more than 1.3 million vehicles, and provided cumulative risk coverage exceeding 1.3 trillion yuan.

2. Focus on Key Groups, Empowering Consumer Choice

The platform has smoothly and orderly taken on high-loss risk business, continuously providing coverage for key groups such as taxi, ride-hailing, and truck drivers. By the end of 2025, taxis, ride-hailing vehicles, and trucks accounted for 81% of all vehicles insured through the platform. By integrating resources from participating insurers, the platform allows vehicle owners to independently choose their insurer, coverage type, and coverage amount, putting the power of choice back in the hands of consumers.

3. Accessible Customer Service Channels

The platform offers professional telephone and online customer service for individual and corporate vehicle owners who encounter issues during the insurance process. It has established a coordination and referral mechanism with relevant insurers, complemented by a robust follow-up system to track problem resolution and customer satisfaction. By the end of 2025, the platform's telephone customer service had handled over 40,000 inquiries, and online customer service had handled over 370,000 inquiries.