Zurich partners with Tesla in Australia as it rides EV trend

The Swiss insurer is simplifying coverage to help cut the cost of buying an electric car.

Zurich Insurance Group is banking on growing electric vehicle (EV) adoption in Australia, whose EV market is slowly gaining traction through increased state incentives and better infrastructure development, to boost sales.

Zurich Financial Services Australia (Zurich Australia & New Zealand) has partnered with Tesla to become the preferred electric vehicle insurer for Tesla customers in the world’s sixth-biggest country by area.

EV ownership in Australia is being pushed by strong government incentives and consumers who want to cut their carbon footprint, Alex Morgan, head of General Insurance at Zurich Australia & New Zealand, told Insurance Asia in an interview.

/Alex Morgan, head of General Insurance at Zurich Australia & New Zealand.

“Tesla had expressed their overarching desire to make owning a Tesla more accessible, and one of the key requirements of owning any motor vehicle is insurance,” he said.

“So, simplifying the process of accessing and purchasing insurance helps reduce the frictional cost of buying a new Tesla. That was their driver in this process,” he added.

Under the deal, Tesla owners will get comprehensive insurance through the InsureMyTesla service. It can be accessed using the Tesla app, simplifying the insurance process for both new and existing Tesla owners.

The insurance covers all vehicle repairs including glass, charging equipment and batteries using Tesla’s accredited repair network. The product is available to all Tesla Model 3 & Model Y customers.

Tesla had a market share of 3.79% in Australia’s car market in 2023, according to the Federal Chamber of Automotive Industries.

“We’re continuing to refine our underwriting over time to bring down the cost of insurance,” Morgan said. This should also bring down the cost of owning not just a Tesla but electric vehicles as a whole.

Morgan said Zurich’s vehicle repair network includes non-Tesla dealers and priority repair services. "That same repair network is available for Tesla customers," he said.

Zurich is also looking into telematics — tracking devices in cars that transmit telemetry data via wireless networks and the vehicle's onboard modem and diagnostics, as well as usage-based insurance products that allow personalised premiums based on driver behaviour and usage.

These could allow insurance companies to offer more tailored and cost-effective solutions to customers.

New electric vehicle purchases in Australia more than doubled to over 98,000 units in 2023, bringing the total EVs on the road to about 180,000, according to an Electric Vehicle Council report. 

The growth is supported by favourable government policies and industry efforts to lower costs, increase model availability, and expand the nation’s charging infrastructure.

In 2022, the government exempted EVs from fringe benefits tax when bought through salary sacrifice arrangements or via company fleets. The policy encourages fleet purchases, with the expectation that these cars will enter the second-hand market in the coming years, making EVs more accessible to more Australians. 

Australians can save as much as A$5,000 yearly under the discount program, according to the council.

‘Rapid uptake’

Australians spend an average of A$4,815 yearly, or A$92.35 a week, to keep their vehicles running, according to Drive's 2023 Ownership Costs survey.

Fuel or electricity accounts for 38% of the cost, or A$1,813 a year. Comprehensive insurance is the second-biggest expense at A$1,697 or 35%.

Driving an electric vehicle can save Australians A$1,320 to A$3,070 annually compared with petrol, diesel, and hybrid vehicles, Drive said.

One major concern for EV owners is the cost and reliability of repairs. 

“Whilst some global figures suggest EVs are significantly more expensive to repair than petrol or diesel-powered cars, it may be the case that those figures are skewed by market-leader Tesla,” according to a report by Sydney-based QBE Insurance Group Ltd.

The report noted that Tesla repairs cost about US$1,350 more after a collision, whilst the cost for non-Tesla EV repairs is US$269.

Morgan said various market studies predict a “continuing rapid uptake” of electric vehicles in the near term. The growth will be driven not only by Tesla but also by other manufacturers transitioning into electric and hybrid vehicles. 

“Global sales of EVs are growing fast and emerging as a new risk pool for the motor insurance industry,” Xin Dai, chief economist for China, and Roman Lechner, economic research lead for property and casualty insurance at Swiss Re Institute (SRI), said in a May 2024 report.

Close to 14 million EVs were sold globally in 2023, up 35% year on year and accounting for 18% of all car sales, according to the report.

“The insurance market for EVs is growing at a similar rate,” they said. “Recent studies estimate double-digit annual growth rates up to 2030, taking the global market size to more than US$200b in 2030, from US$51b in 2022.”