The rapid rise of Chinese-built electric and hybrid vehicles on UK roads is colliding with an insurance market already grappling with high claims costs, leaving some motorists facing restricted choice and higher premiums.
Research by Carwow indicated that UK motor insurers are more hesitant to cover certain Chinese models than comparable vehicles from other countries. While drivers can sometimes reduce upfront costs by choosing cars made in China, they often have fewer insurance options than buyers of electric, hybrid and petrol cars from Europe, the US and South Korea and, in some cases, pay close to double the premium of equivalent non-Chinese petrol models.
According to a report from The Guardian, Chinese brands such as BYD, XPeng and Jaecoo have become increasingly visible on UK roads as manufacturers target Europe with aggressively priced battery and hybrid models. In March this year, the Jaecoo 7 was the UK’s bestselling new car. Nicknamed the “Temu Range Rover”, it is sold as both a hybrid and a petrol vehicle.
Figures from Carwow suggest that access to cover may dilute the apparent value of these vehicles. In its latest exercise, half of the requests for quotes on selected Chinese models were declined.
Carwow looked at four vehicles – the hybrid Jaecoo 7, the XPeng G6, the BYD Seal U and the Skywell BE11 – and sought quotes from five insurers for a 27-year-old man living in Hampshire.
Carwow’s Iain Reid said the limited panel of insurers means drivers of Chinese cars have less scope to shop around and secure competitive terms and, in some instances, may struggle to obtain cover at all. He attributed the caution among some insurers to the limited repair data, evolving parts supply chains and absence of long-term claims histories for many of the newer models.
Carwow’s research also suggests that insuring some Chinese-built EV or hybrid models can be significantly more expensive than arranging cover for a similar non-Chinese petrol vehicle.
The average cost of insurance for the Jaecoo 7 was £1,103 a year – almost twice the £577 average for a Skoda Karoq, which Carwow used as a petrol equivalent, the report said.
Only Admiral and Aviva were prepared to cover the XPeng G6, at an average premium of £936 a year, compared with £639 for a petrol Hyundai Kona.
Aviva was the sole insurer to offer cover for the Skywell BE11, at £685, slightly above the £638 average for a petrol Ford Kuga. Insurance for the BYD Seal U averaged £876, against £730 for a petrol Kia Sportage.
Reid noted that, on Carwow’s figures, Chinese cars currently cost an average of £901 a year to insure, around £255 more than the £646 average for equivalent petrol models. He expects costs to moderate as the market matures but acknowledges that this offers little immediate comfort to new buyers, particularly as the main difficulty is not just price but the availability of quotes.
The challenges surrounding Chinese EVs come as the wider UK motor insurance market faces sharply higher claims costs. The Association of British Insurers has reported record pay-outs driven by rising repair and theft costs and more expensive replacement parts, with average premiums climbing as a result. Meanwhile, the Financial Conduct Authority has said that recent premium rises largely reflect external cost pressures but has also warned insurers that they must improve elements of claims handling under the Consumer Duty.
Within this environment, Chinese-built EVs and hybrids pose a particular underwriting challenge. Many are new to the UK, with limited claims experience, developing parts supply networks and, in some cases, questions around the repairability of batteries and the likelihood of write-offs. All of these factors can materially influence repair costs, repair times and total-loss rates.
Stephen Kennedy of financial information service Defaqto points out that EVs generally cost more to repair after collisions and that insurers may not yet hold sufficient data on some newer models to price risk with confidence. He characterised the situation as a “chicken and egg” problem, in which a lack of policies sold translates into a lack of data to support accurate pricing.
Car sales rose in April, with registrations up sharply year on year, and there were notable increases in registrations of Chinese brands such as BYD and Jaecoo, according to figures from the Society of Motor Manufacturers and Traders. That growth means both mainstream and specialist motor insurers will increasingly have to decide how, and at what price point, they want to participate in this segment.
A spokesperson for Hastings Direct said the insurer assesses how straightforward a car is to repair, how safe it is and how strong demand appears when determining its stance on a particular model. The company covers some Chinese brands but noted that certain newer marques remain relatively low volume in the UK and that their parts supply chains are still developing.
Axa, which did not provide any quotes in the Carwow exercise, said some Chinese brands are sufficiently new to the market that it does not yet have the data needed to underwrite them.
Aviva, which acquired Direct Line last year, said it reviews pricing as more information becomes available.
Meanwhile, Admiral acknowledged that insurance prices have risen in recent years but says it has not increased EV premiums more than those for petrol cars and continues to aim for accurate and competitive pricing for EV drivers. The insurer confirms that it does provide cover for Skywell vehicles.
The Association of British Insurers reiterated that limited claims history for a given model makes it more difficult for insurers to evaluate risk.
Manufacturers, for their part, are seeking to reassure the market. Oliver Lowe, head of product at Omoda and Jaecoo UK, said the company is working closely with insurers and recognises that risk-based decisions tend to evolve slowly. He said Omoda and Jaecoo have dedicated teams focused on reducing insurance costs by improving access to repair data, strengthening parts supply chains and building claims histories. Lowe noted that similar concerns arose when Japanese and South Korean brands entered the UK and expects insurance availability and pricing to improve as Chinese manufacturers become more established on British roads.
