Briefing: Are motor insurers ready to focus investment on electric power?

By Jon Guy

The ownership of electric and hybrid vehicles across the UK has increased rapidly over the last year – and with it comes new challenges for insurers.

The drive to end the sale of internal combustion engine (ICE) powered vehicles by 2030 in the UK is gathering momentum and figures compiled by A-plan insurance highlighted the speed in which the transformation is occurring.

There have been barriers, however, including the struggle for infrastructure to keep pace with the number of vehicles on the road.

The scale up of charging points for electric vehicles, the requirements for fast charging points and the limited range of a single charge has been a concern, but the past year has seen a huge investment in infrastructure in an effort to keep electric vehicles on the move.

Data from A-plan showed that as of July 2023, the number of charge points in the UK reached 45,737, a 40% increase over 2022.

Of these, some 32% are in the greater London area alone, while 8.9% are in Scotland, 4.2% are in Wales and only 1% are in Northern Ireland.

A-plan’s data also found that private ownership of hybrid electric vehicles had risen by 83% across the UK, while ownership of fully electric vehicles rose by 178%.

Meanwhile, the figures showed that ownership of internal combustion engine (ICE) vehicles has fallen over the past three years, with diesel car ownership having shrunk by 3% over the period.

Keeping pace

A spokesperson for A-plan explained: “Electric and hybrid vehicles are becoming increasingly popular in the UK.

“On average, an electric or plug-in hybrid vehicle costs around £10-£15 less than an equivalent petrol journey.

“However, the upfront cost of an electric vehicle is much higher. Used hybrid and electric vehicles are available, but come at a higher price than their petrol counterparts.”

For insurers, the issue remains over how they can keep pace with the change in technology and the rising number of electric vehicles on the road amid problems that can come from this economic push.

The lack of accident centres with the necessary expertise in electric and hybrid vehicle repair capabilities is still leaving insurers faced with making the decision to write off a vehicle that could be repaired far too often.

Access to replacement parts is also limited – and as motor manufacturers create new technology to expand their range of vehicles and the installation of systems that will aid the move to autonomous travel, the repair sector is seemingly behind the curve.

Are we close to the tipping point where insurers switch their attention away from ICE powered vehicles to focus investment on those powered by electric and hybrid systems?

The tipping point may well depend on how often they are willing to write off a vehicle simply because of the inability to repair it.