Premiums don’t reflect higher claims cost of electric vehicles: Bloomberg

A new report from Bloomberg Intelligence suggests that, despite charging on average 12% more to provide cover for electric vehicles, auto insurance premiums in the UK still do not account for the much higher claims cost of electric vehicles.

Analysts estimate that repairing damaged electric vehicles can cost 53% more than for other vehicles, meaning that insurer margins could come under increasing pressure as electric sales increase, unless prices are adjusted.

Kevin Ryan, Senior Industry Analyst, Insurance at Bloomberg Intelligence said: “Electric vehicles (EVs) made up 23% of all new UK auto sales in 2022, and while insurers charge 12% more on average to insure them, that may not be nearly enough,” commented Kevin Ryan, Senior Industry Analyst, Insurance at Bloomberg Intelligence.

“EV batteries also have uniquely challenging risk profiles capable of significantly boosting insurers’ third-party costs,” he added.“We therefore contend that the 12% extra average cost to insure an EV is probably an inaccurate reflection of additional risk, squeezing margin at Admiral, Direct Line, Hastings and other auto insurers.”

Source: Reinsurance News, https://www.reinsurancene.ws/premiums-dont-reflect-higher-claims-cost-of-electric-vehicles-bloomberg/