As electric vehicles continue to be an increasingly common sight on UK roads, insurers are faced with new exposures where data will be crucial in understanding this evolving motor risk landscape.
Electric vehicle sales in the UK continue to grow, with year-to-date sales of battery electric vehicles (BEVs) up nearly 50% in 2022. This growth is spurred not only out of demand but also necessity, as the UK Government will ban the sale of new fossil fuel cars in 2030 as part of its Net Zero strategy.
EVs have a very different risk profile to traditional vehicles with internal combustion engines.
Since 2010, UK drivers and fleets have now registered more than one million BEVs and plug-in hybrid electric vehicles (PHEVs), an impressive milestone for the UK as businesses and individuals seek to reduce their carbon footprint.
While these growth figures are commendable, electric vehicles still only represent a fraction of the total number of cars on the road, estimated to be between 2-3%. However, it is more than enough for insurers to have serious conversations about how they intend to understand and adapt to the new risks and opportunities posed by these new vehicles.
As with any emerging risk, a lack of data and limited experience will ultimately lead to poor decision making and many underwriters either overestimating or underestimating the risk. Verisk has been actively involved in the EV space both in the US and UK, conducting research and building tools and datasets to help insurers make sense of this new environment.
Electric vehicle risk vs conventional automobiles
At the surface level, electric vehicles have only around 20 moving parts compared to over 200 in conventional automobiles, which could be interpreted that they are simpler, have fewer points of failure, and that they are easier to fix.
In truth, electric vehicles have a very different risk profile to traditional vehicles with internal combustion engines. They may have fewer parts, but they tend be a lot more complex and expensive to replace.
Consider batteries. The average electric battery is estimated to cost around £5600 to replace, making a relatively small crash potentially a much larger loss for the insurers if the battery is affected. Specialist repair shops are few and far between, making it more difficult to find service and source parts, adding to the potential insurance cost.
If damaged, electric vehicle batteries can be prone to fire, and a driver must quarantine their vehicle in an accident. While internal combustion engine vehicles can also catch fire, the batteries in electric vehicles can be composed of toxic materials, and material leakage following a collision can create another potential liability exposure.
Electric vehicles also tend to be heavier and feature faster acceleration, which can catch new drivers off guard. They can also be substantially quieter than petrol cars, creating more of a safety threat towards pedestrians who can’t hear them.
Batteries also have varying charge times and battery range, with drivers potentially needing roadside assistance if they run out of battery with no charging station nearby. Charging cables are also quite expensive and could be targeted by thieves.
Verisk’s Electric Vehicle Database
The database contains over 175 unique technical attributes for existing models of battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs), which are available in different formats and via registration lookup. Insurers can gain critical insights into the associated risk of each vehicle which can be highly useful for both underwriting and predicting future claims.
All of the electric vehicle datasets can be appended to a customer’s policy book as a batch or accessed through Verisk’s Data Insight Hub, a continuously expanding source of insurance data and analytics accessible at any part of the customer journey, including the point of quote.
If you would like to find out more about the Electric Vehicle Database, please do not hesitate to get in touch.