Adopting a back-to-basics approach to risk management on electric vehicles could help operators keep EV premiums under control, the Association of Fleet Professionals (AFP) has reported.
The industry body, which will be present at this April’s Great British Fleet Event, warned last year that fleets were seeing significant rises in EV premiums, outpacing the increases across all insurance premiums, due to insurers “mistakenly inflating” both repair costs and risks for electric vehicles.
Its advice was for fleets to engage their insurers in a dialogue about possible solutions.
And with many members having done this, the latest feedback is that insurers want to see evidence of good core risk management, and how this having an impact on claims rates.
Paul Hollick, chair, said: “This might sound obvious but it seems [insurers] want to work with fleets to see that insurance fundamentals are being properly followed when it comes to EVs.”
Hollick said that the mood could be summed up by one fleet manager, who had reported that “our insurer’s view is that as long as we can demonstrate that we’re managing the risk, such as by training drivers to use EVs, we won’t see an increase in premiums”.
Another AFP member reported their insurer had indicated that the cost of repairing and replacing EVs would always be “a distant secondary consideration” to simply working to keep claims as low as possible.
“The fleet view is often that insurers don’t like EVs because they tend to be expensive to buy, that parts are often in short supply, and that the electrical, mechanical and bodywork expertise needed to repair them is still in short supply.
“However, it appears that if you talk to the insurers themselves, they’ll say that these things matter but only to a limited extent, and that the most important fact when it comes to controlling premiums is to do more to prevent EV accidents and theft.”
Hollick added that insurers seem keen to get evidence that fleets have an understanding that EVs are different from ICE vehicles and to see this applied to risk management. This includes driver training – but the AFP said insurers are “mainly interested in the fundamentals”.
The organisation said the feedback showed the importance of keeping channels of communication open with suppliers.
“Some fleets may view the attitudes from insurers that are being reported here with a degree of scepticism. However, we are certainly hearing from others who are doing what their insurer is asking in terms of managing EV risk that their premiums are not rising, or only by a little. It shows that talking to suppliers in the face of rising costs can have an impact.”
It’s an area where the AFP continues to support members and work with the insurance market directly to educate the sector about fleet requirements. The organisation has also appointed board member Peter Milchard to take a lead on insurance topics within the organisation.
A report published by Insurance Times this week indicates continued concerns from insurers over the increased costs that EVs could present in the event of a claim, including from high-cost batteries and longer repair times and waits for parts.
In October 2023, John Lewis Financial Services temporarily paused offering new policies and renewals on fully electric vehicles to wait for underwriter Covéa to carry out cost analysis.
However, speaking in November 2023, the AFP said insurers were increasing fleet premiums for EVs based on “incorrect and, in some instances, irrelevant” data.
The AFP warned of three issues that were unnecessarily impacting premiums, including many insurers using information based entirely on experience with Teslas and applying this across the board to all EVs, even to vans.
The fleet industry body also highlighted that insurers seem unsure of the value of EVs written off in accidents – with some working on the incorrect basis that a damaged battery has no market worth.
The AFP also warned of an undue amount of worry about the possibility of EV fires and the potential for damage to then spread beyond the vehicle itself to other cars and vans, as well as surrounding property – as highlighted by widescale myth-spreading over the recent Luton car park fire, which was in fact caused by an ICE vehicle.
