GlobalData Forecasts the Global Electric Vehicle Insurance Market to Surpass $500 billion in 2033
- GlobalData's Electric Vehicles and the Future of Motor Insurance report indicates that the global electric vehicle (EV) insurance market was worth approximately $49 billion in 2020
- GlobalData estimates that by 2033 the value of the global EV insurance market will grow ten-fold to exceed $500 billion
- Falling EV prices, greater battery ranges, and sufficient charging infrastructure will contribute to the worldwide proliferation of EVs, growing the market for EV insurance in parallel
As per GlobalData's Electric Vehicles and the Future of Motor Insurance report, the global EV insurance market will grow to $507 billion by 2033. Government initiatives, legislation, greater battery ranges, and falling EV prices will lead to rapid proliferation across the world.
The three primary regions for EV insurance will be Europe, North America, and Asia. China’s early dominance of the EV market contributed considerably to Asia’s 41.2% share of EV insurance in 2020. Growth in other regional markets is expected to contribute to more significant proportions of EV insurance by 2033.
Key Challenges Faced by the Industry
The insurance industry must ensure it stays abreast of the changing motor vehicle landscape. Understanding and pricing the risk profile of the new vehicle segments like EVs without decades of data and experience is an immediate challenge—a race against time as insurers look to perfect this work as the prominence of EVs grows around the world. Battery costs, advanced in-vehicle technologies, and underdeveloped yet still constrained supply chains are driving high claims costs for EVs, although falling costs and maturing repair networks will moderate these factors over time.
Within motor insurance, claims management primarily involves the maintenance and repair of vehicles. For the time being, this process is more costly and time-consuming than for traditional vehicles. Fewer specialist mechanics mean it is harder for damaged or dysfunctional vehicles to be serviced in a timely manner. The higher price of spare parts, having to come from specialist manufacturers, will increase the cost of repairs. With the battery pack contributing to a significant proportion of the overall price of EVs, any work or replacement on this component will bring about significant repair costs.
One of the biggest challenges governments facing across the globe is the countrywide rollout of efficient and sufficient charging points. With ‘range anxiety’ persisting across public opinion regarding EVs, a suitable network of slow chargers in domestic settings must be complemented with a suite of fast and rapid charging points at service stations and other public areas.
There is an increasing trend among leading insurers within the EV space to create standalone, EV-specific insurance policies. The added complications of the charging equipment, plus the different technological makeup of the vehicles, justifies this development.
As EVs continue along their path of development alongside the Internet of Things, connected cars will begin to become a more prominent part of the global motor parc. The in-vehicle data collection capabilities allow for telematics-style motor insurance without the need for a black box or a smartphone app. Telematics devices are increasingly used for usage-based insurance (UBI), which is becoming popular among fleets, low-mileage drivers, and younger demographics. In relation to this, Tesla offers its own insurance product based on the connected car data gathered by the internal systems to accurately price each customer’s premiums. Telematics devices are already becoming more popular among younger drivers. In the UK, 22% of under 30s have a pay-as-you-go insurance policy, with 21.7% having a black box installed in their car for a telematics policy.
Access the full report: Electric Vehicles and the Future of Motor Insurance.
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