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Electric vehicles

How to address this growing market from an insurance perspective

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    Executive Summary

    In recent years, e-mobility has achieved a breakthrough in many markets around the world. The question is no longer if electric vehicles (EVs) are coming and will replace traditional powertrains, but rather how they are coming and when they will take over the largest share of the global powertrain mix. For details on how to differentiate between non-plug-in electric vehicles and plug-in electric vehicles, see below

    Electric Vehicle Fig.1

    The new rise in EV sales also brings challenges and opportunities for many different market segments. OEMs need to decrease their production costs for EVs and increase their vehicles’ range at the same time. Governments need to decide how long they want and need to continue to incentivise the markets. And the whole charging network industry needs to find a way to provide a convenient charging experience and sufficient capacities. But (re)insurance also plays a vital role in this equation and needs to address new customer risks and deliver state-of-the-art solutions with a high level of quality.

    The challenge for insurance is to identify new risks concerning the vehicle itself and potential new driving behaviours, despite not having sufficient EV data at hand. The battery especially plays an important role, as it represents the major cost block in case of a claim.

    By conducting a thorough and statistically robust analysis on a dataset with high EV exposure, we came a substantial step closer to accurately quantifying EV risk. We can say with a good level of confidence that we believe MOD Accident frequency and MTPL frequency are moderately higher while MOD Glass severity is slightly reduced, though the magnitude of this effect, and whether it is temporary, will still need to be investigated further as the EV market share continues to grow.

    Furthermore, we do not currently have evidence suggesting that EVs are subject to different risks than ICEs for MOD Assistance or MOD Other perils. For future analysis, questions concerning fire, theft or other perils will be interesting to address as the availability of data increases.

    Disclaimer: The conclusions presented throughout this report are not necessarily applicable to other portfolios or countries. Therefore, they should be taken with a grain of salt when comparisons are made.

    Electric Vehicle
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    Massimo Cavadini
    Massimo Cavadini
    Senior Executive Partner
    Massimo is Senior Executive Partner within Insurance Consulting. Massimo has more than 10 years of experience in P&C insurance with a strong focus on insurance pricing & underwriting. Since he joined Munich Re in 2017, Massimo helped clients globally in improving their technical performance by using advanced analytics, in launching motor and property products and in expanding into new markets. Before joining Munich Re, Massimo was a senior pricing analyst in the Global P&C of Generali Group and pricing analyst in the Global P&C of Allianz Group, where he managed technical excellence projects in Europe, Asia and Latam. By training Massimo is a physicist and holds a PhD in Astrophysics.
    Damiano Massimi
    Damiano Massimi
    Senior Engagement Manager / Co-Lead Electric Vehicle for Americas
    Damiano is a Senior Engagement Manager with Insurance Consulting Unit based in Bogotá, Colombia. During his ten years in the insurance industry, Damiano participated in and led projects worldwide, focusing mainly on retail business. Currently, he is leading Insurance Consulting’s expansion in Latin America and co-leading the Electric Vehicles topic. Damiano is contributing to Pricing & Underwriting Committees, webinars, conferences, and papers.
    Norbert Hackner
    Norbert Hackner
    Senior Engagement Manager / Co-Lead Electric Vehicle for Europe and Middle East
    Norbert is a Senior Engagement Manager, based in Munich. With 12 years in the Automotive industry, he's gained valuable experience in strategic consultancy, primary insurance, and OEM business models. Norbert now focuses on business development for global clients, ensuring profitability and growth. His expertise lies in delivering advisory services for new electric vehicle insurance solutions, steering motor extended warranty programs worldwide, and creating innovative business models for primary insurers in the new mobility and OEMs sector.
    Thibault Imbert
    Thibault Imbert
    Senior Insurance Consulting Manager / Co-Lead Electric Vehicle for Asia-Pacific
    Thibault is a Senior Manager with Insurance Consulting Unit based in Singapore. Thibault has more than ten years of professional experience in the insurance industry, working mainly in the European and Asian markets. His core expertise is in Property & Casualty insurance, with a focus on pricing and product development. Thibault regularly contributes to webinars, conferences and papers, sharing insights on technical and/or emerging topics.