A few weeks ago our MD James Allenby attended Insurance Post’s Motor & Mobility Conference at Mercedes-Benz World in Weybridge.
The Conference theme focused on: ‘How can insurers overcome logistical and technical obstacles on the road to EV revolution’. Points discussed included benefits and infrastructure obstacles yet to come and how insurance companies and underwriters keep up to date with increasingly technical EVs.
With the upsurge in popularity of EVs, it is a subject that is becoming more important and prominent than ever, and one which the motor insurance industry is having to adapt to.
Of course, the ongoing supply chain issues the automotive industry is experiencing is being felt by many of us, insurers included.
Covid-19, followed by the semiconductor shortage, now combined with the war in Ukraine have all manifested into a global parts shortage. It has been nothing short of the perfect storm. Manufacturers are scrabbling for build parts to fulfil growing order banks, while workshops, including bodyshops, are frantically searching for replacement parts to be able to keep drivers on the road.
This parts shortage has only highlighted that the vehicle insurance industry is not yet equipped to deal with EV claims. So, what is the reason for this? The simple fact is that many insurers have not yet built strong relationships with repairers who have the specific knowledge, training and equipment to reinstate EVs back to factory standard. An EV, is of course, a very different proposition to a traditional ICE motor vehicle, and this is fundamentally why the motor insurance industry is encountering challenges.
If an EV is subject to an extensive lengthy repair, there are serious financial impacts that need to be considered. Many insurers are still ‘on the backfoot’. There needs to be a greater appreciation within the industry about the additional benefits of EV ownership over ICE, and the detrimental effect not only from an environmental standpoint but from an ongoing financial one too.
With fuel prices at the pump rocketing at unprecedented levels, it is not surprising that an increasing number of car owners are making the switch to fully electric, or hybrid vehicles. Car sales figures underline this trend. Households are feeling the squeeze with the cost of living escalating and many want to make more economical choices, while being sympathetic to environmental matters too.
But, for companies and company car drivers there are even greater financial gains. EV’s are at present very tax efficient for both company owners and their employees. The costs through BiK tax implications can escalate further if given a fossil-fuelled replacement car for any length of time. It also doesn’t sit well ethically with some ‘green-thinking’ companies, who have an environmental reputation to uphold. The argument for choosing an EV, whether for personal or business use, is very strong, so it is imperative that the motor insurance industry is prepared.
So, what happens if an EV is involved in an accident, or off-the-road for any reason? Let’s take Tesla for example. Tesla drivers are not happy to be provided with a traditional petrol/diesel car for a number of reasons: they rely on Tesla’s own supercharging network. Further considerations include the ability to park EV’s for free in most London boroughs (saving in some cases £20 per hour in parking) as well as zero congestion charges. Many repairers currently don’t have capacity for some EVs so they are being left on owners’ driveways while the backlog continues to clear.
Here at NOVO, we have seen a significant increase in the loan period for our unique like-for-like vehicle replacement service, many of our clients are without their own vehicles for six months or more. In fact, the longest time one of our EVs has been out currently exceeds 214 days – and we are still counting.”
Volume sales of EVs may still be in their infancy, but they are rapidly maturing. So, it is vital that insurers are prepared to meet this growing demand. We have a dedicated EV insurance team at NOVO, with specialist knowledge of the industry and offer flexible solutions for EV owners.