GTA chief says greater regional stability needed prior to launching EV credit hire scales

The General Terms of Agreement (GTA) between insurers and credit hire organisations (CHOs) is a voluntary agreement that launched in 1999. It was devised by the ABI to establish credit hire rates that an innocent driver would reasonably be entitled to recover in court following a road traffic accident.

However, with electric vehicles (EVs) increasingly being used on the UK’s roads – Zapmap, for example, noted that by the end of October 2024, there were 1.3 million fully electric cars in the UK – some market commentators have called for these vehicles to be included in the GTA.

This would set credit hire charges pertaining specifically to EVs, alongside those already detailed for petrol and diesel vehicles.

James Roberts, head of insurance sales at Europcar, told Insurance Times that the question of whether EVs are to be introduced into the GTA must be addressed in the short term because credit hire operations are already planning their fleet acquisitions for the next two years and beyond.

He said: “There is no denying that recent months have seen an increase in demand for EVs as individuals and businesses become more zero emissions savvy.

“The Driver and Vehicle Licensing Agency (DVLA) data for Q1 2024 showed that there were more than 1.1 million fully electric cars on UK roads, with other reports suggesting that by August 2024, [this] number was over 1.2 million.

“EVs are becoming an evermore important factor for motor insurers when planning how to grow, service their portfolio and manage claims costs.”

Creating certainty

For Roberts, “a big barrier” impacting the progression and adoption of EVs in the UK is “the lack of a specific EV category in the GTA”.

He continued: “Insurers and credit hire companies are still in need of that important clarity to remove some of the uncertainty on credit hire costs recovery.

“Given that the government may be set to put an outright ban on the sale of new petrol and diesel vehicles by 2030, albeit allowing hybrids to remain on sale for a further five years, insurers need to get to grips with the EV landscape rapidly to support motorists.”

Roberts added that including EVs in the GTA would “remove claims friction and unnecessary litigation”, as well as “enable credit hire companies to more accurately forecast the profitability of credit hire claims when the customer drives an EV”.

A March 2024 study by Europcar found that 74% of claims sector professionals named the rise of EVs as the biggest influence on the replacement vehicle market over the next five years.

One respondent additionally feared that the insurance supply chain would not be able to keep up with EVs upwards trajectory.

Roberts said: “As a business, our fleet team is already looking at the shape of the fleet in two years’ time. To do so, we need greater certainty around the access to EVs under the GTA so we and other companies can better plan the shape of our fleets to meet the needs of the customers.”

Starting the discussion

However, those behind the GTA have told Insurance Times that there needs to be greater uniformity in the charges levied for the hire of EVs before any substantial action can be taken to amend the GTA.

“From the outset, what we have sought to do is bring together our insurance and credit hire subscribers to agree a maximum daily rate.”

James Driscoll, senior claims manager for motor damage and credit hire at Aviva and chair of the GTA Technical Committee, said: “The long-term goal of the GTA is to be able to add more mutually agreed EV rates onto the GTA.

“The challenge is that rates need to reflect the regional disparity in third party EV claims, which we are not seeing at present.

“The GTA reviews data on a quarterly basis and as soon as the rates stabilise, we believe insurers and CHOs will be able to agree on reflective rates for EVs that are fair for insurers and CHOs.”

Addressing the pointers raised by Europcar, Stewart McCulloch, independent chair at the GTA, added: “I am surprised we have an organisation that is driving [this] agenda which is not part of the GTA.

“My message is that you are welcome to join us and be part of the discussion as to how we bring EVs into the GTA. The GTA does include a number of EVs and while [this] is not a large number, we as a market are looking at how we can understand where the market is going in terms of pricing, etc.

“From the outset, what we have sought to do is bring together our insurance and credit hire subscribers to agree a maximum daily rate and when it comes to EVs, we need to find that rate at a level which will not impact the customer.”

One-size-fits-all stance

McCulloch noted that “insurers cannot look to agree a rate which is at kilter with the wider market. We have to have a one-size-fits-all rate across the country”.

He continued: “At present, we have a significant number of EVs in the south east of England, but if you go to northern England and Scotland, the number of EVs available is much lower. This is despite the fact that Scotland has the highest number of charging points per head in Britain.

“The example I always use [is] the BMW i8. You would struggle to get one in Inverness, yet there is a large number in central London.”

He explained that regional differences between the availability of EVs and current hire rates are significant – comparing some parts of the country, EV credit hire rates can differ by around £1,000 a day, McCulloch noted.

“Until the market stabilises in terms of pricing and we are able to agree a broad rate, it would be irresponsible to move quickly to create a scale in the GTA,” McCulloch added.

“Our subscribers understand the difficulties that would come in rushing to do that.

“We are doing a great deal of work on what has been called GTA 2.0. That will look to remove frictional costs from the process and enhance trust between subscribers to reduce claims costs and insurance premiums.

“We examine the state of the EV market on a quarterly basis and the next review will be in December. I have to say, none of our subscribers have come to me to say they are unhappy.

“If we seek to move too early, it will cause difficulties.”