Thailand's non-life insurance sector is on high alert as reports circulate that a Chinese electric vehicle (EV) manufacturer active in the Thai market may face bankruptcy, hinting that EV insurance is already a loss-making business.
The news raised concerns over mounting liabilities for local insurers, particularly regarding repair claims for unavailable parts, according to insurance executives.
A news report alleged the Chinese parent firm of Neta Auto Thailand is facing an inquiry into its debt repayment capability.
Several Thai insurers already raised premiums for EV policies to reflect rising risks. For instance, annual premiums previously priced around 20,000 baht are now climbing to 25,000-28,000 baht per vehicle, especially for brands with limited service infrastructures and unreliable supply chains, said the executives.
They said most insurers still accept policies for new EVs from the troubled brand. However, renewed contracts may have significantly higher premiums due to increased risks, such as scarcity of spare parts and the potential insolvency of the automaker.
Some insurers are even suspending coverage for specific EV brands or models, citing complex logistics, limited availability of trained technicians and higher repair costs using brand-exclusive service centres.
Moreover, frequent price cuts by EV makers, particularly from China, are complicating insurers' ability to set accurate premiums. These sudden devaluations have created situations where insured values exceed current market prices.
Apisit Anantanatarat, chief executive of Bangkok Insurance (BKI), said the company is taking a cautious stance on EVs due to high loss ratios. In 2024, BKI's EV insurance segment recorded an average claims ratio of 67-68%, with some brands nearing 100%.
"While this is an improvement from two years ago, when the ratio topped 120%, it still signals the EV market carries elevated risks," said Mr Apisit, adding BKI's EV policies are priced 15-20% higher than industry averages, reflecting these risks.
To better manage costs, BKI plans to invest in its own EV repair facilities through a joint venture with Chinese partners. These general garages will allow BKI to reduce dependency on high-cost, brand-specific service centres.
He said aggressive price cuts by Chinese EV brands as they shift inventory to Southeast Asia to avoid US tariffs is resulting in insured vehicles being valued higher than their new retail prices. This disparity raises the risk of fraudulent claims.
"In some cases, policyholders might be tempted to intentionally damage or abandon their vehicles to claim total loss compensation," said Mr Apisit. "We're seeing signs that some EVs are difficult to resell, especially low-cost models, which could further drive such behaviour."
Amorn Thongthew, managing director of Viriyah Insurance, said the company's EV insurance portfolio was in the red last year. Viriyah insures 66,000 EVs across more than 10 automotive brands, with total premiums tallying 1.5 billion baht.
"Repair and parts costs for EVs are roughly 50% higher than those for traditional vehicles, but our EV premiums are only 15% higher, which is insufficient to cover the risk," he said.
Viriyah plans to raise EV insurance premiums in 2025 and is negotiating with EV distributors to reduce spare parts prices and manage claims more efficiently. The insurer is launching an "EV 2+" policy this quarter, providing brand-certified repair centre coverage, aiming to build on its total of 1.5 billion baht in EV premium revenue this year.
Guillaume Mirabaud, chief executive of AXA Insurance Thailand, said the company reported minor losses in its EV portfolio, using a data-driven, cautious approach. AXA China is engaging with automakers to tailor risk management strategies.
"We are committed to EV insurance, but will not engage in price wars. Our goal is to price each policy appropriately based on model-specific risk data," he said.