Lichengbao releases China’s first usage-based auto insurance product
Auto data company Lichengbao has launched a new usage-based auto insurance product in China, which is the first of its kind in the country. The company has partnered with several smaller insurers to make this possible, aiming to provide drivers with a way to save money on auto insurance coverage. Usage-based insurance has been gaining popularity in China, largely due to the fact that drivers in large cities only use their vehicles sparingly.
40% of consumers in China drive less than 15,000 kilometers annually
According to Lichengbao, approximately 40% of drivers in China drive less than 15,000 kilometers every year. These drivers could save money on by purchasing usage-based auto insurance coverage. Conventional insurance charges consumers a flat rate regardless of whether or not they use their vehicles, whereas usage-based policies only charge consumers when they are actually driving their vehicles. In the United States, this type of insurance coverage is somewhat popular among young consumers, who typically face higher premiums. In China, however, older drivers tend to have higher auto insurance premiums, which means they may benefit more from usage-based policies.
Drivers will be able to use a mobile application to purchase insurance products
Drivers can make use of the Lichengbao mobile application, through which they can purchase usage-based auto insurance policies. The minimum premium for these policies has been set at $155. Once a policy has been acquired, drivers will have a telematic system installed in their vehicles, which will track their driving habits while the vehicle is in use. Premiums will be based on how much drivers operate their vehicles.
Lichengbao aims to fill in an auto insurance gap that exists in China’s market
While China does not lack in the number of insurance providers that operate in the state, Lichengbao may be well positioned to fill in a gap in the existing market. The company can make use of big data, allowing it to better assess and accommodate the needs of consumers. As such, Lichengbao may be successful in making usage-based auto insurance very popular in China.