Higher EV sales to surface new insurance risk factors: SRI

EV insurance can take the global market size to more than $200b in 2030.

The world’s sales of electric vehicles (EVs) are forecast to grow by 30% per year globally, prompting new insurance risk factors due to changes in driving behaviours, vehicle usage, repairability, and new vehicle features.

“The insurance market for EVs is growing at a similar rate. Recent studies estimate double-digit annual growth rates up to 2030, taking the global market size to more than $200b in 2030, from $51b in 2022,” according to Swiss Re Institute’s (SRI) “Insuring electric vehicles: a growing opportunity but with near-term challenges” insight.

Increasing accident rates and repair fees could be outliers in near-term underwriting hurdles, which may require more attention from insurers with EV producers to assess.

Despite high premiums, insurers struggled with underwriting profitability in EV insurance, with combined ratios exceeding 100% in 2023.

“Global sales of electric vehicles (EV) are growing fast and emerging as a new risk pool for the motor insurance industry. Close to 14 million EVs were sold globally in 2023, up 35% year-on-year and accounting for 18% of all car sales,” 

SRI urges for a deeper cooperation between EV insurers and carmakers may lead to better outcomes for all parties involved.