Motor insurers' readiness to invest in electric power.

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【Summary】The 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 (ICE) vehicles by 2030 is gaining momentum. Infrastructure, such as charging points, has struggled to keep pace, but investment in this area has increased. Private ownership of hybrid electric vehicles has risen by 83% and fully electric vehicles by 178%.

FutureCar Staff Sep 13, 2023 11:21 PM PT

Motor insurers' readiness to invest in electric power.

New research indicates that the ownership of electric and hybrid vehicles in the UK has significantly increased in the past year, posing new challenges for insurers. The UK's commitment to phasing out internal combustion engine (ICE) vehicles by 2030 is gaining momentum, and A-plan insurance has compiled data that highlights the speed of this transformation. However, there have been obstacles, particularly in terms of infrastructure struggling to keep up with the growing number of electric vehicles on the road.

One of the concerns has been the expansion of charging points for electric vehicles, 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 address these issues and ensure the smooth operation of electric vehicles. A-plan's data reveals that as of July 2023, the UK had a total of 45,737 charge points, marking a 40% increase compared to 2022. Notably, 32% of these charging points are located in the greater London area, while Scotland, Wales, and Northern Ireland have smaller shares.

A-plan's data also shows a significant rise in private ownership of hybrid electric vehicles, with an 83% increase across the UK. Similarly, ownership of fully electric vehicles has risen by 178%. In contrast, ownership of ICE vehicles has declined over the past three years, with diesel car ownership shrinking by 3% during that period.

Insurers face the challenge of keeping up with the evolving technology and the growing number of electric vehicles on the road. This economic shift poses problems, such as the lack of accident centers equipped with the necessary expertise in electric and hybrid vehicle repairs. As a result, insurers often have to decide 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 develop new technologies and systems to support autonomous travel.

The question arises as to whether insurers are nearing a tipping point where they will shift their focus and investment away from ICE vehicles towards electric and hybrid systems. The decision may depend on how frequently insurers are willing to write off vehicles due to repair difficulties.