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China's insurance regulator is making changes to how auto insurance rates are calculated, giving insurance companies more flexibility to set their own premiums.

Liu Feng is with the China Insurance Regulatory Commission.

"Our reform plans will ensure that overall insurance rates will remain mostly at the same level as before. But for 'high-risk' applicants, we will raise the premium threshold, and for 'low-risk' applicants, insurance rates can be brought down, which will mean benefits for better drivers."

The new reforms do include a number of controversial provisions, including a 'high premium, low compensation' rule.

This refers to the premium that owners pay based on the price of a newly-purchased car.

But if that vehicle is involved in an accident, drivers will only be compensated based on the price of the car at the time of the accident, not its initial sticker price.

The new policies are going to be rolled out in May in several provinces, including Heilongjiang, Shaanxi and Shandong.