China's motor insurers are being plagued by companies offering vehicle pool coverage and deceiving consumers by exploiting the names of big-brand insurers such as Ping An and Taikang.
Vehicle coverage pools were started as mutual assistance pools for transportation companies which grouped together because they found difficulty buying motor insurance due to the risks involved. Each subscriber paid a fee, and owners could claim compensation from the pool if their vehicles were involved in accidents.
The pools have extended from the commercial freight transportation industry to taxis and vehicles used in car-hailing services. Now, they are widely marketed to ordinary car owners through insurance intermediaries.
One estimate is that there are currently more than 2,000 companies selling such “insurance”, according to a report by Securities Times. Their services are offered through cold calls or via social media channels like WeChat.
The vehicle coverage pooling businesses are not licensed by the National Financial Regulatory Administration and thus do not fall within the scope of its supervision. Purchasers find that their rights are not protected.
Recently, many car owners complained that they had intended to buy motor insurance but actually bought subscriptions to vehicle coverage pools. Complaints swamp radio stations and social media when vehicle owners are unable to contact the management of the pools to claim compensation or refunds.