I. Industry Risk Analysis

(1) Policy Risk

Entrepreneurs in the auto insurance industry face multiple policy risks in a dynamic regulatory environment: The continuous deepening of the comprehensive reform of auto insurance has led to the compression of premiums and the narrowing of profit margins. Product innovation needs to respond to the new regulations on terms and rates from the China Banking and Insurance Regulatory Commission (CBIRC) at any time. The iteration of exclusive terms for new energy vehicles is accelerating, and the standards for emerging risk protection such as battery liability and autonomous driving are still unclear. Policy changes directly affect the product architecture. The application of regulatory technology strengthens the requirements for anti – fraud and data compliance, and the tightening of user privacy protection policies drives up operating costs. There are differences in the pilot floating rates of compulsory traffic accident liability insurance for motor vehicles in different regions, and the local regulatory policies for commercial auto insurance are inconsistent, so cross – regional business expansion faces compliance adaptation challenges. Innovative businesses such as telematics – based usage – based insurance (UBI) face uncertainties in actuarial rules lagging behind and access to regulatory sandboxes, and there is a risk of mismatch between the policy adjustment cycle and the market window period.

(2) Economic Risk

The auto insurance industry currently faces multiple risks under economic cycle fluctuations: During the economic slowdown, the decline in residents’ disposable income directly weakens consumers’ ability to renew policies and purchase new auto insurance. The rising unemployment rate may lead to a higher vehicle idle rate, resulting in a contraction of the premium scale. The fluctuations in the capital market caused by the shift from quantitative easing policies will compress the investment income space of insurance companies, directly affecting the pricing flexibility of products. The rapid increase in the penetration rate of new energy vehicles has led to a structural increase in the claim settlement ratio. Coupled with the intensifying homogeneous competition in traditional auto insurance, new startups are facing the survival dilemma of “increasing volume but not increasing profits”. At the same time, innovative businesses such as telematics – based insurance require continuous technological investment, which exacerbates the pressure on the capital chain during the economic downturn.

(3) Social Risk

Under the inter – generational consumption differences, the auto insurance industry faces the risk of inter – generational demand断层: Young consumers (Generation Z and millennials) prefer digital and scenario – based insurance services (such as pay – per – mile insurance and autonomous driving liability insurance), but the existing products are still mainly traditional auto insurance. The lag in technological adaptation may lead to the loss of young customers. Middle – aged and older consumers pay more attention to traditional protection and offline services, but the digital upgrade of the industry has led to an experience断层 for them. The differences in the core demands of the two generations of consumers for privacy data and claim settlement efficiency have intensified the fragmentation of service standards. Entrepreneurs need to maintain two sets of service systems at the same time, which leads to a sharp increase in operating costs but is difficult to form economies of scale, and they are likely to fall into the dilemma of “not pleasing both generations of customers”.

(4) Legal Risk

Entrepreneurs entering the auto insurance industry need to be vigilant against multiple legal risks: In terms of regulatory compliance, the product rate design needs to meet the filing requirements of the CBIRC. If the pricing ceiling is exceeded or illegal rebates are given, administrative penalties will be faced. In terms of data security, excessive collection of sensitive information such as users’ driving behavior may violate the “Personal Information Protection Law”. In the sales process, exaggerating the scope of protection and concealing exemption clauses may constitute false publicity, leading to class – action lawsuits. If there are behaviors such as delaying claim settlement and discriminatory clauses in the claim settlement service, it may trigger liability under the “Insurance Law”. In addition, the new UBI auto insurance model involves disputes over the legality of driving data collection. The lack of qualification review of technology partners will lead to joint liability risks, and the compliance costs of startups will increase sharply.

II. Entrepreneurship Guide

(1) Suggestions on Entrepreneurship Opportunities

The surge in the number of new energy vehicles has given rise to differentiated insurance needs. Entrepreneurs can develop modular auto insurance products for new risks such as intelligent driving systems and battery degradation, and achieve accurate customer acquisition through direct – sales channels of automobile manufacturers and car owner communities. There is a data dividend window period in the UBI auto insurance track. Entrepreneurs can integrate resources from OBD device manufacturers and map service providers to build a dynamic pricing model, and focus on on – demand insurance services for the groups of online car – hailing drivers and young car owners. The expansion of the charging pile operation network has created a gap in infrastructure insurance. Entrepreneurs can cooperate with charging service providers to design value – added service packages such as charging failure insurance and battery over – charging protection, and embed them into the charging platform transaction process through a profit – sharing mechanism.

(2) Suggestions on Entrepreneurship Resources

Focus on connecting with core technology resources. Prioritize the integration of intelligent vehicle telematics data interfaces and accident repair network resources. Obtain driving behavior data through direct connection with the ODB port data of automobile manufacturers, and jointly build a national service network with third – party rescue agencies. Use the SaaS – based insurance technology platform to achieve accurate pricing and rapid claim settlement. Focus on obtaining cooperation resources from local bank channels. Reduce customer acquisition costs through the bank – insurance channel, and simultaneously access the direct – sales system of new energy vehicle manufacturers to obtain accurate user traffic. Establish strategic cooperation with leading loss adjustment companies to solve the problems of underwriting risk control, and obtain investment from the ecosystem of automobile manufacturers through industrial capital connection.

(3) Suggestions on Entrepreneurship Teams

Entrepreneurs in the auto insurance industry should form a composite team with insurance actuarial, digital technology, and channel resources. The core members should include insurance product design experts (familiar with auto insurance terms and rate calculation), Internet platform development talents (building online insurance purchase and claim settlement systems), and integrators of after – market resources in the automotive industry (connecting with 4S stores, repair shops, etc. for on – the – ground services). It is recommended that at least one person in the team has insurance brokerage/assessment qualifications. In management, adopt a triangular cooperation mechanism of “product + operation + risk control”. Focus on cultivating data modeling capabilities to meet the pricing needs of UBI auto insurance. At the same time, establish a flexible cooperation model with regional insurance intermediaries. The scale of the startup team is recommended to be controlled within 10 people, and talents with a background in insurance technology companies should be preferred for key positions.

(4) Suggestions on Entrepreneurship Risks

Auto insurance entrepreneurs should focus on niche markets (such as new energy vehicles and specific car owner groups), optimize pricing and risk control through accurate data modeling, and reduce the risk of homogeneous competition. Build a lightweight online customer acquisition system, and cooperate with physical channels such as repair shops and 4S stores to share traffic costs. Strictly control the compliance bottom line, hire insurance actuarial and legal counsel teams to dynamically follow up on regulatory policies (such as the consistency of reported and actual operations and restrictions on handling fees), and avoid risks of illegal qualifications and business models. Develop on – demand insurance products (such as UBI auto insurance and short – term temporary insurance) and introduce value – added services such as third – party rescue and valet driving to enhance customer stickiness and premium space. In the initial stage, use the re – insurance profit – sharing model to control claim settlement risks, and reserve at least 6 months of cash flow to cope with regulatory inspections and market fluctuation cycles.