In the UK alone, more new EVs were registered in 2021 than in the past five years combined.
In the next ten years, it’s expected that over 100 million electric cars will be registered across the globe.
Last year, more than 163,000 EVs and over 106,000 plug-in hybrids (PHEVs) along with hybrid electric vehicles were registered. This equates to more than 25% of the new car market last year. While this is good for the BEV Plan, it’s also a challenge for insurers as there are many elements that would not be considered with an ICE powered vehicle. There will be challenges ahead when insuring EVs, for certain.
Electric vehicles will soon be the only means of personal automotive transport in the UK and many other countries around the world. Main concerns will be how new increasingly complex electric car technology will transform the cost base of claims. The hurdles insurers will have to overcome start with accurate and detailed information on individual electric cars while addressing traditional concerns such as:
Lack of accurate and comprehensive information
Traditionally, insurers have had to rely on a patchwork of data providers to build up a picture of a vehicle using overlapping data sets. Unfortunately, this is time consuming and comes at the cost of needing to maintain a data science and analytics function to create order from chaos.
Buying behaviour changes
We’ve seen a major shift in buying behaviour over the past couple of years. Customers who needed car insurance before are now turning to public transportation. Car buyers are creatures of habit and nothing if not practical. In the last few years they have shied away from BEV options due to concerns with repairs. OEM's have responded to these concerns, with some governmental prodding, by weaning buyers on to electric vehicles more gradually using mild hybrid and plug in hybrid technology.
The Brain of the Machine
The number of individual mechanical parts in battery electric vehicles is similar to an ICE. However, there is a marked difference in the interconnectedness and the prevalence of complex software and ECUs to monitor and regulate these systems.
Currently, the BMW range has a requirement from around 70 ECUs to over 150 in the current 7 series, replete with an array of Advanced Driver Assistance Systems (ADAS) such as lane departure warning and active cruise control. In the last few years it's as if OEM's have thrown their entire parts bin up in the air and been forced to figure out how to wire it back together again with the addition of battery technology. This has left manufacturers with supply lines of over 200 providers, overly reliant on ECUs and software to make sense of the tangle of integration. This makes for complex, time consuming repairs involving highly trained technicians with laptops, not just spanners.
The current automotive arms race is to reduce costs by reducing complexity. Technology tends to simplify over time and the future of BEVs is likely to bear this out. It is estimated that Tesla has a six year lead on other OEMs on radically reducing the number of ECUs; consolidating them instead into just a few very powerful central processors making advanced use of AI. The automotive arms race is to reduce costs by reducing complexity.
The only way to stay ahead of EV challenges is to truly understand the vehicle being underwritten.
Knowing and truly understanding an individual electric car’s risks and liabilities while offering a streamlined customer experience will set successful insurance companies apart from others in a big way. Vehicle data is the lifeblood of the actuarial and underwriting function, with some estimates putting the value of vehicle data at parity with personal credit history. Properly used can also be of tremendous value for the customer in pre-populating and streamlining the experience at point of quote.
Using emerging technologies with AI and machine learning is the obvious solution. Easy anytime access to vital information will ensure a competitive status and help keep customers happy. Vehicle data will reinforce how business is written. Having only one data provider with a single consolidated view of the whole vehicle, including its current and future value, possible modifications, standard and advanced options, mileage patterns, and MOT advisories gives a pricing advantage to insurers who are able to make use of this data. The information available would be a much more efficient way of accurate valuations and fact-based claims.
Cazoo Data Services helps insurers see the full picture through data enrichment.
Our award winning insurance products are designed for the automotive industry. We offer whole market data with an unbiased data driven view allowing insurance companies full visibility of the entire market, enabling accuracy and transparency.
Cazoo Data Services brings innovative AI and data science-driven modelling to a sector that relies heavily on manual editorial processes and opinion to establish current and future vehicle values. Our products offer clear real-time data and actionable insights that the Financial Ombudsman trusts and insurers love.
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