Motor insurers' investment shift to electric power

Home > Industry Analysis > Content

【Summary】Ownership of electric and hybrid vehicles in the UK is increasing rapidly, posing challenges for insurers. The push to end the sale of internal combustion engine vehicles by 2030 is gaining momentum, but infrastructure struggles to keep up. However, there has been a significant investment in charging points, with a 40% increase in the number of charge points in the UK in 2023.

FutureCar Staff Sep 13, 2023 9:16 AM PT

Motor insurers' investment shift to electric power

New research reveals a significant increase in the ownership of electric and hybrid vehicles in the UK, presenting new challenges for insurers. The UK government's goal of ending the sale of internal combustion engine (ICE) vehicles by 2030 is gaining momentum, as evidenced by data compiled by A-plan insurance. However, there have been obstacles to overcome, particularly in terms of infrastructure keeping up with the growing number of electric vehicles on the roads.

One of the main concerns has been the availability of charging points and the need for fast charging options, as well as the limited range of a single charge. Fortunately, there has been a substantial investment in infrastructure over the past year to address these issues and ensure the smooth operation of electric vehicles. A-plan's data shows that as of July 2023, the UK had a total of 45,737 charge points, representing a 40% increase from the previous year. Notably, 32% of these charge points are located in the greater London area.

In terms of vehicle ownership, A-plan's data indicates a significant rise in private ownership of hybrid electric vehicles, with an increase of 83% across the UK. Ownership of fully electric vehicles has also seen a substantial growth of 178%. Conversely, ownership of ICE vehicles has declined over the past three years, with diesel car ownership shrinking by 3% during this period.

Insurers are now faced with the challenge of keeping pace with the evolving technology and the increasing number of electric vehicles on the road. One of the primary concerns for insurers is the lack of accident centers equipped with the necessary expertise to repair electric and hybrid vehicles. This often leads to the difficult decision of whether to write off a vehicle that could potentially be repaired. Additionally, access to replacement parts is limited, and the repair sector appears to be lagging behind as motor manufacturers continue to develop new technology and expand their range of vehicles.

The question arises as to whether insurers are nearing a tipping point where they will shift their focus and investment from ICE vehicles to electric and hybrid systems. This tipping point may depend on their willingness to write off vehicles solely due to the challenges associated with repairing them.