Motor insurers' readiness for investing in electric power.

Home > Industry Analysis > Content

【Summary】Ownership of electric and hybrid vehicles in the UK has increased rapidly, posing new challenges for insurers. The push to end the sale of internal combustion engine vehicles by 2030 has led to a surge in electric vehicle infrastructure investment. However, insurers face difficulties in keeping up with the technology and repair capabilities of electric vehicles. Limited access to replacement parts and a lack of expertise in repair centers have led to a higher rate of write-offs.

FutureCar Staff Sep 13, 2023 4:21 PM PT

Motor insurers' readiness for investing in electric power.

New research indicates that the ownership of electric and hybrid vehicles in the UK has experienced a significant increase in the past year, posing new challenges for insurers. The UK's initiative to phase out 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 along the way, such as the struggle to develop infrastructure that can keep up with the growing number of electric vehicles on the road.

One of the concerns has been the scaling up of charging points to accommodate the demand for electric vehicles, as well as the need for fast charging points and the limited range of a single charge. Nevertheless, there has been a substantial investment in infrastructure over the past year to ensure the smooth operation of electric vehicles. According to A-plan's data, the number of charge points in the UK reached 45,737 as of July 2023, representing a 40% increase compared to 2022. Notably, around 32% of these charging points are located in the greater London area, while Scotland, Wales, and Northern Ireland account for 8.9%, 4.2%, and 1% respectively.

A-plan's data also reveals 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 surge, rising by 178%. Conversely, ownership of internal combustion engine (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 up with the changing technology and the growing number of electric vehicles on the road. One of the issues they encounter is the lack of accident centers equipped with the necessary expertise in electric and hybrid vehicle repair capabilities. This often leads insurers to make the decision to write off vehicles that could potentially be repaired. Additionally, access to replacement parts is limited, and the repair sector appears to be lagging behind as motor manufacturers introduce new technology to expand their range of vehicles and facilitate the transition to autonomous travel.

As a result, insurers may soon reach a tipping point where they shift their focus and investment away from ICE-powered vehicles and towards electric and hybrid systems. The decision to do so may depend on how frequently they are willing to write off vehicles due to the challenges associated with repairing them.