Source: Xianlian She
Behind the 230 billion loss figure are 3.86 billion vehicles on the road, 2524 billion in compensation payouts to accident victims, and rising standards for personal injury coverage.
Recently, the National Financial Regulatory Administration released the 2025 compulsory traffic accident liability insurance operating report.
Data is quite revealing: 3.86 billion insured vehicles, 2852 billion yuan in premium income, 2524 billion yuan in claim payouts, yet an operating loss of 230 billion yuan for the year.
On one hand, coverage keeps expanding; on the other, losses keep growing. What's going on? Let's break down these results in plain terms.
First, consider the "face": compulsory insurance is expanding rapidly.
In 2025, a total of 64 insurance companies operated compulsory traffic accident liability insurance (CTALI) nationwide, covering 3.86 hundred million motor vehicles—a 3.8% year-over-year increase. Of these, cars accounted for 3.47 hundred million. In simple terms, roughly every 10 vehicle on the road is backed by CTALI coverage. The total insured amount rose to 76.8 trillion yuan, up 3.4% from last year.
Regarding compensation, 2025 year's compulsory traffic insurance payout was 2524 billion yuan, a 11.6% year-over-year increase. The share of compensation for personal injury claims rose from 16% to 18%, indicating that the protection offered by compulsory traffic insurance for accident victims is indeed strengthening.
Now, look at the "bottom line": $0 billion in compensation and a $1 billion annual loss.
The numbers demand close scrutiny. In 2025, premium income reached 2852 billion yuan, up 5.2%, while claims costs hit 2524 billion yuan, a 11.6% increase. With claims growing more than twice as fast as premiums, this widening "scissors gap" is the direct source of losses.
Including management and service costs of 538 billion yuan (including the relief fund of 10.7 billion yuan), the underwriting side incurred an actual loss of 296 billion yuan. After allocating 66 billion yuan in investment income, the book operating loss amounts to 230 billion yuan.
Notably, this is not the first year of losses. From 2021 to 2025, underwriting losses on compulsory traffic insurance widened from 44 billion yuan to 296 billion yuan, increasing by a factor of 5.7 over five years. Starting in 2023, the business has recorded consecutive operating losses for three years, with loss amounts growing each year.
Where did the lost money go?
The first reason is the rising standards for personal injury compensation. After 2020 unified the national urban-rural standard for personal injury and death compensation, death and disability indemnity aligns with urban resident standards. With the national per capita disposable income of all residents increasing annually, it reached 43377 yuan in 2025, meaning that single payouts for major personal injury cases are getting higher.
The second reason is the growing number of new energy vehicles (NEVs). In 2025, the industry underwrote 4358 million NEVs, accounting for 12.1% of all insured motor vehicles—a significant increase from 8.9% in 2024. NEVs have higher accident frequencies and repair costs compared to fuel-powered vehicles. These "two high" characteristics directly drive up claim costs.
The third reason is the increased frequency of vehicle usage. In 2025, commercial highway freight volume grew by 3.4%, and passenger flow on highways increased by 3.3%. With more miles driven, the likelihood of accidents naturally rises. That year, there were 5135.9 compulsory traffic accident liability insurance claims filed, a year-over-year increase of 7.3%, far exceeding the growth rate of total motor vehicle ownership.
Will premiums increase? Is compulsory insurance sufficient?
Let's start with premiums. The average compulsory traffic accident liability insurance premium per vehicle was 2025 yuan in 762.1, a year-over-year decrease of 0.1%, indicating overall stability. Industry experts also agree: adjusting the base rate for compulsory insurance requires strict legal procedures, making a nationwide price hike in the short term highly unlikely.
Is this enough? An easily overlooked fact: Compulsory Traffic Accident Liability Insurance only covers third parties, not yourself or passengers in your vehicle.
After the 2020 comprehensive reform, the liability limits for 2020 are: Death and Disability ¥18, Medical Expenses ¥1.8, Property Damage ¥2000, totaling ¥20.
Damaging a luxury car costs 10 yuan to repair, but compulsory insurance only covers 2000 yuan. Injuring someone requires 5 yuan in medical expenses, yet compulsory insurance pays just 1.8 yuan. You must cover all remaining costs yourself.
So, compulsory third-party liability insurance is the "safety net," but it's not enough. Commercial third-party liability coverage can range from 100 to 300 thousand yuan and serves as the primary source for major compensation claims.
Conclusion
Ultimately, compulsory traffic insurance is not a business—it's a system.
Behind the 230 billion loss figure are 3.86 billion vehicles on the road, 2524 billion in compensation payouts to accident victims, and rising injury protection standards year over year.
Losses must be acknowledged, but the people-first foundation of compulsory auto insurance remains unchanged.
