Insurance companies in Shanghai will have greater freedom to set car insurance rates from Thursday as the insurance regulator continues to reform the market.
The insurers will be able to price the rates on four factors — clients' claims records, violation of traffic rules, insurance companies' own risk assessment of the client, and the costs of selling the insurance policies through various channels, the Shanghai Bureau of the China Insurance Regulatory Commission said yesterday.
Insurers in Shanghai will be allowed to slash 40 percent off the standard rate if the policy holder has not claimed compensation in the past three years.
Drivers can get another 10 percent off the standard rate if they haven't broken any traffic rules in the past year.
But the rates can be more than doubled for drivers who claim frequent compensations and violate traffic rules.
Insurance companies can also cut or raise the rates by 15 percent, based on the companies' risk assessment of their clients and the cost of sales channels.
The new rules allow policy holders to enjoy as high as 61 percent off the standard rate, up from the current 30 percent that insurers offered.
Another change is that the new standard rate will be set based on car models and not on car prices as was the previous practice.
"The reform will slightly lower car insurance premiums in general for drivers in Shanghai," said Shan Shufeng, head of the non-life insurance supervision division with the Shanghai Bureau of CIRC.
Shanghai will be among the third batch of regions, including Beijing, Shenzhen and Jiangsu Province, to unveil market reforms of the car insurance rates.
In the first quarter of this year, the average car insurance rates fell 7.69 percent year on year for the first batch of areas and 6.64 percent for the second batch, official data showed.
