The emergence of electric vehicles (EVs) marks a significant evolution, and one that impacts insurance companies. The unique issues surrounding claims involving EVs have the potential to increase claims costs significantly with the resulting impact on bottom line profits.

Now is the time for all insurers to be vigilant in handling EV-related claims as statistics and insights from HF’s data analytics tool Car Wash are showing.

There are several ways that EV claims stand out, particularly those involving credit hire claims. Statistics from Car Wash show:

  • Approximately 2% of all claims involve a fully electric claimant vehicle
  • 46% of hire vehicles are electric when the claimant vehicle is electric, demonstrating the prevalence of electric credit hire claims
  • The average hire duration for EVs stands at 38 days, significantly longer than the 22 days for non-EVs
  • EV hire vehicles command a higher daily rate of £262.12 compared to £147.10 for non-EVs
  • The average EV hire claim amounts to £14,225.76
  • HF’s internal data reveals cost mitigation strategies result in an average saving of £7,124.7 on settled EV cases
  • Our Car Wash tool achieves a significant match rate of 7.8% on EV claims, showing discrepancies which could influence settlement on claims involving both EV claimant and hire vehicles

 

The Cost Conundrum: Why EV Claims Stand Out

Electric vehicle claims give rise to distinct financial considerations compared to traditional combustion engine vehicles. Several factors contribute to the comparatively higher costs associated with EV claims, including:

Newer Technology: The relatively recent growth in EVs translates into an equally new and immature repair infrastructure. Options for parts are gradually expanding but the current landscape offers fewer choices. As EVs gain market share, the availability of repair options is expected to improve, but for now, the limited choices contribute to higher repair costs.

Tesla Dominance: Tesla’s dominance in the electric car market significantly influences repair costs. Studies including recent data from claims management specialists Mitchell, reveal that the average accident repair cost for a Tesla is approximately £1,000 higher than that of petrol cars. Their dominance therefore influences the financial impact of EV claims on insurance companies.

Skilled Technicians: Repairing EVs demands specialised expertise. Not all mechanics are equipped with the necessary qualifications to handle EV repairs, leading to increased costs and longer lead times for maintenance, MOTs and repairs.

 

Navigating the EV Insurance Landscape

For insurance companies, awareness and understanding of this data and the insights it offers, is crucial. That will inform the proactive measures and strategies that need to be implemented alongside their trusted business partners.

Specialised Training: Investing in training to provide mechanics with the skills required for EV repairs can mitigate repair costs and reduce lead times, enhancing operational efficiency.

Strategic Partnerships: Collaborating with EV manufacturers and repair networks can foster access to specialised parts and repair services, facilitating timely and cost-effective claim resolution; working with legal partners who understand the multiple and sometimes more complex factors involved can result in better outcomes for both the insurer and their customers.

Data-Driven Decision-Making: Leveraging advanced analytics tools e.g. HF’s Car Wash, enables insurance companies to identify trends, assess risk profiles, and optimise claims management strategies, in order to efficiently manage operational costs.

Policy Adjustments: It’s crucial to review motor insurance policies to take into account the unique characteristics of EVs, ensuring adequate coverage and appropriate pricing.

 

Conclusion

The rise of electric vehicles is a transformative shift in the automotive industry, presenting both challenges and opportunities for insurance companies.

As EV claims increase, insurance providers must proactively adapt their strategies and policies to effectively manage the financial implications associated with EV-related claims.

By leveraging insights from data analytics tools and working closely with their trusted suppliers including manufacturers and legal representatives, insurance companies can implement targeted strategies. Armed with that combined knowledge and expertise, insurers can move forward with sustainable, profitable businesses in an increasingly electrified future.

Counter Fraud Electric Vehicles