Shenzhen BYD Property Insurance Co., Ltd. (referred to as "BYD Insurance") recently disclosed its second-quarter 2026 solvency report, showing growth in both premium scale and profitability. However, the high compensation pressure in the new energy vehicle insurance industry remains a challenge to resolve.
On the business front, in the first half of this year, BYD Insurance accumulated signed premiums of 1.42 billion yuan, with auto insurance accounting for nearly 83%. The average premium per vehicle in the second quarter was 3,547.77 yuan, a slight increase from the first quarter's 3,512.89 yuan. On the profitability side, the company achieved a net profit of 120 million yuan in the first half, a year-on-year surge of over 280%. However, a combined ratio of 101.23% indicates a minor underwriting loss, with profits heavily reliant on investment income to compensate.
As of the end of the second quarter of 2026, BYD Insurance's comprehensive solvency adequacy ratio had risen to 549.50%, providing a substantial capital buffer. Nonetheless, the coexistence of large-scale related-party transactions and nearly 100 million yuan in pending insurance litigation highlights the dual nature of industrial synergy benefits and risk control governance shortcomings, serving as a typical example of automakers venturing into the insurance sector.
On July 31, Time Finance contacted BYD Insurance regarding these issues. A company representative stated that BYD Insurance is currently focused on enhancing product and service capabilities, striving to provide customers with better service and experience, and is not accepting external interviews for the time being.
Core Underwriting Business Remains Unprofitable, High Compensation Cycle in Auto Insurance Persists
Unlike traditional property insurers that rely on intermediary channels, BYD Insurance leverages its shareholder ecosystem and direct sales advantages to achieve sustained premium growth with significant cost advantages. However, this has not been enough to offset the high compensation pressure inherent in the new energy vehicle insurance industry.
On the premium side, the solvency report shows that in the first half of 2026, BYD Insurance's accumulated signed premiums totaled 1.42 billion yuan, with a highly concentrated insurance structure. Auto insurance contributed 1.176 billion yuan, accounting for nearly 83% of total revenue, while non-auto insurance products brought in only 245 million yuan. All premiums were sourced from direct sales channels.
In terms of unit pricing, the average premium per vehicle in the second quarter was 3,547.77 yuan, slightly up from 3,512.89 yuan in the first quarter. Notably, BYD Insurance's business footprint continues to expand. At the end of May, the financial regulatory authority approved BYD Insurance to add compulsory traffic insurance (Jiaoqiangxian) operating qualifications in Hebei, Jiangsu, and Zhejiang (excluding Ningbo). According to BYD Insurance's official WeChat account, auto insurance services in these regions have been gradually launched since July, providing room for future premium growth.
On the profitability front, BYD Insurance's earnings have shown significant volatility in recent years, with the underwriting side not yet achieving stable profitability, and profits depending to some extent on investment income. Financial data indicates that in 2024, BYD Insurance recorded a net loss of 169 million yuan, with a new energy vehicle insurance loss ratio of 233.92% and a combined ratio exceeding 308%. In 2025, as business scale doubled, total premiums reached 2.871 billion yuan, the combined ratio fell to 102.49%, and the company turned profitable, achieving a net profit of 93.624 million yuan. In the first half of 2026, performance jumped again, with net profit reaching 120 million yuan, a year-on-year increase of 281.87%.
However, behind the improved profitability figures lies the reality of persistent losses in the core business. In the first half of 2026, BYD Insurance's combined loss ratio was 96.97%, and the combined ratio stood at 101.23%, meaning premium income could not cover claims and operational costs, resulting in a minor underwriting loss. Thanks to the advantages of its direct sales model, the company's combined expense ratio in the first half was only 4.26%, far below the industry average of 25% to 30% for traditional property insurers, significantly compressing operational costs. Yet, this was still insufficient to offset the naturally high compensation pressure of new energy vehicle insurance.
An actuarial professional in the insurance industry explained to Time Finance that components like the three-electric system (battery, motor, electronic control) and LiDAR in new energy vehicles are typically replaced rather than repaired, with repair costs being 2.2 times those of traditional fuel vehicles. The accident rate is about 11 percentage points higher, and combined with the frequent phenomenon of private vehicles being fraudulently insured as commercial vehicles, the industry's combined ratio for new energy vehicle insurance generally exceeds 100%. In 2025, the entire industry faced an underwriting loss of 5.6 billion yuan, with automaker-affiliated insurance companies all caught in this dilemma without exception.
Under the pressure of underwriting losses, investment asset allocation serves as a profit buffer. As of the end of the second quarter of 2026, BYD Insurance's recognized investment assets stood at 6.657 billion yuan, primarily comprising insurance asset management products, equity investments, and time deposits. The three-year average annualized comprehensive investment return rate reached 5.42%. The investment income generated from accumulated premiums is a key tool for offsetting underwriting losses and achieving book profitability.
"However, this model has weak anti-cyclical capabilities. If the capital market declines, the company will once again fall into losses," the actuary told Time Finance.
Frequent Related-Party Transactions, Adequate Capital Buffer
BYD Insurance, formerly known as E'An Insurance, was established on February 6, 2016, as one of the four professional internet insurance companies approved by the former China Banking and Insurance Regulatory Commission. Currently, the company has a registered capital of 4 billion yuan, with its registered address in Shenzhen, and is a wholly-owned subsidiary of BYD Auto Industry Co., Ltd. (referred to as "BYD Auto Industry").
The deep integration with the group's industrial model provides BYD Insurance with stable business growth. The solvency report shows that in the second quarter of 2026, the company conducted three and four major related-party transactions with BYD Auto Industry and BYD Company Limited (Shenzhen: 002594), respectively. The cumulative transaction amount per quarter exceeded 33.6 million yuan for each. In the first half of the year, the total annualized scale of related-party transactions with these two group entities exceeded 235 million yuan and 202 million yuan, respectively, covering the entire chain of vehicle insurance, after-sales claims, and repairs.
In June 2026, Byd Company Limited (002594.SZ) stated on its investor interaction platform that BYD Insurance will leverage technology to empower insurance, relying on the shareholder's accumulation of new energy vehicle technology. It plans to use technologies such as artificial intelligence, big data, cloud computing, and the Internet of Vehicles to enhance driver safety and provide customers with high-quality, comprehensive risk protection services.
It is noteworthy that during the reporting period, BYD Insurance still had large pending guarantee insurance lawsuits. Two lawsuits initiated in 2023 had total claim amounts of 98.24 million yuan, with the core dispute revolving around disagreements on insurance coverage and claim amounts. The loss amount is currently undeterminable. If the court rules that the company must bear full compensation liability, it could directly erode current net assets and profits.
At the same time, the high compensation pressure of new energy vehicle insurance has become normalized. During the reporting period, BYD Insurance's top five full compensation cases each involved individual claim amounts exceeding 1.6 million yuan, with the highest reaching 2.3496 million yuan. All incidents were caused by vehicle collisions, continuously releasing high compensation risks.
Nevertheless, BYD Insurance currently maintains a substantial capital safety buffer, with strong risk resilience. As of the end of the second quarter of 2026, the company's comprehensive solvency adequacy ratio was 549.50%, an increase of 12.74 percentage points from the previous quarter. This was mainly driven by an increase in actual capital from the second quarter's net profit and other comprehensive income, effectively isolating short-term payment risks.
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