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Compulsory vehicle liability insurance triggers disputes

By Shangguan Zhoudong (chinadaily.com.cn)
Updated: 2007-05-31 15:57

A Beijing lawyer recently filed a lawsuit against China's top insurance regulator due to overpriced compulsory vehicle liability insurance, according to People's Daily.

Sun Yong, a lawyer with Sinotrust Law Firm recently sued theChina Insurance Regulatory Commission(CIRC). He thought insurers involved in the business made huge profits from the insurance and he estimated the total profits would be 40 billion yuan (US$5.23 billion) a year.

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Sun said it was unfair for consumers, because CIRC, insurance companies and some experts set the price and benefited from the insurance. He wanted CIRC to initiate an administrative review on the insurance. The regulator rejected his demands.

The China Consumers' Association wants theNational Development and Reform Commission(NDRC), China's top economic planner, to hold public hearings on setting the premium.

Insurers involved in compulsory vehicle liability insurance show a far better financial performance than before. PICC Property & Casualty Co Ltd, one of China's leading non-life insurers, saw its net premiums rise 4.2 percent to 55.62 billion yuan in 2006. PICC said the increase was mainly due to the fast-growing net premiums from the compulsory vehicle liability insurance, which contributed 5.34 billion yuan in net premiums to the company.

Ping An Property & Casualty Insurance Co Ltd recorded 1.05 billion yuan in net profits, up 148.3 percentyear-on-year, mainly because of compulsory vehicle liability insurance. In 2004 and 2005, the company reported a loss.

Statistics from the CIRC Chongqing Bureau showed that, from July 1 last year to the end of March this year, Chongqing collected 200 million yuan as compulsory vehicle liability insurance premium and spent 24.38 million yuan as compensation.

In March, the loss ratio of the compulsory insurance in Chongqing was 11.7 percent, far lower than 55.7 percent, the average loss ratio of commercial vehicle liability insurance in the month.