Charging ahead
The future of e-mobility insurance involves an entire ecosystem at play
By Elias Chedid, COO and Deputy CEO of Seib Insurance & Reinsurance Company
The past few years have seen regional governments and policymakers ramping up e-mobility investments and infrastructure. In Qatar, the Ministry of Transport has set a goal to electrify 35% of its vehicle fleet and 100% of its public transport buses by 2030 – while its EV Strategy also entails the installation of 600-plus charging stations across the country.(1) In Saudi Arabia, the Public Investment Fund’s significant capital injection in US-based EV (electric vehicle) manufacturer Lucid Motors, and the launch of the SEVCIDI (Saudi Electric Vehicle Charging Infrastructure Development Initiative) have also signaled serious commitment to e-mobility progress. And in the United Arab Emirates, ADNOC Distribution alone aims to nearly double its network of fast-charging stations by the end of this year, from 90 to somewhere between 150 and 200.(2)
If these developments are anything to go by, the region’s e-mobility future is already here and is moving fast. Insurers and brokers who are just getting up to speed are navigating a labyrinth of challenges and forces at play – and all the jargon that comes with them.
What was once straightforward motor insurance has morphed into an entire ecosystem for EVs, AVs (autonomous vehicles), shared mobility platforms, and all their nuts and bolts. The lines have become blurred on what mobility entails and on where insurers should play their part. From charging infrastructure to automation to connectivity to IoT (Internet of Things), the implications for our industry are both overwhelming and exciting. To see the big picture, we must take a step back.
In 2024, the global autonomous vehicles market was estimated to have surpassed 54 million units.(3) This growth has been spurred by an enabling regulatory and policy environment, growing climate change concerns, greater EV affordability, battery technology advances, and expanding charging infrastructure – shifts that were accelerated by the COVID-19 pandemic’s digital economy boom.
Global EV premiums will naturally follow this upward trajectory. The baseline for the bottom line in EV insurance has so far relied on higher upfront prices; equally high replacement, repair, and maintenance costs; heavier vehicle weights incurring greater third-party damage; and specialized coverage for components such as charging station damage and even non-accidental risks such as electric surges.4 Then, emerges the need to secure the wealth of data that is generated by electric vehicles, from location to speed to driving patterns.5 No doubt, this a treasure trove for risk and premium pricing. And it is an equally costly responsibility – and lucrative opportunity, depending on whose side you’re on – to ensure and insure data privacy and security.
Simply put, e-mobility risks are bigger and more diverse. And naturally, so is our opportunity. Placing our bets on higher premiums would be short-sighted.
(1) Fitch Solutions (2023). Qatar EV Profile: Nascent, but rapidly growing market for EVs
(2) Reuters (2024). UAE’s ADNOC Distribution targets expanding its number of car fast-charging stations
(3) Statista (2023). Autonomous vehicles worldwide – statistics & facts
(4) Economic Times Auto (2024). EV insurance market is expected to grow at a CAGR of over 40%
(5) Carrier Management (2023). EV Industry Offers Challenges, Opportunities for Insurers
The transition – and now overlap – between EVs and AVs makes insurance all the more complex. Profitability should, in turn, pivot from high premiums to precision, behavior-based pricing. Telematics, the field that involves collecting data on driving behavior and vehicle usage through devices installed in vehicles, is central to this usage-based insurance shift. It means that premiums can be priced and adjusted in real time, based on the actual, not perceived risk – “pay how you drive” and “pay as you drive”, as some industry insiders call it.6 Add to that real-time data on vehicle and battery health generated by IoT-connected EVs, and we’re looking at precise risk predictions, not just assessments. Estimates suggest that by 2030, vehicle connectivity alone can generate somewhere between USD 30 billion and USD 50 billion for global mobility insurance.(7)
Of course, this complicates things. Not only will consumers become more demanding of their premium pricing, but there will also be more competitors vying for their vehicle coverage. And this includes unusual suspects, from OEMs (original equipment manufacturers) to tech providers.(8) For insurers, the legwork starts with understanding the risk transfer from drivers to manufacturers, and adapting products and services accordingly. Automakers have taken note and are now eyeing their piece of the pie by offering add-on insurance policies with vehicle purchases. Insurers should look to partner with, not protect their share against them – by providing, for instance, instant access to their policies for car buyers at the time of purchase, and then upselling their offering with add-on services such as personal health insurance.
In this direction, the future of e-mobility insurance is far less about drivers than it is about their journey. Which party would be liable, for instance, when an accident involves two autonomous vehicles? How many other parties would be involved? And who’s to cover what? EY-Parthenon suggests that the transition to EVs, AVs, and shared mobility platforms, coupled with data-informed insight on driver behavior, will lead to a 31% contraction in the insurance personal line by 2035.(9) In tandem, higher safety features of e-mobility vehicles translate into fewer claims, but pretty costly ones whenever an accident does occur; a contradiction that no insurer wishes to see reflected on the bottom line.
A different mindset is in order. Ultimately, we’re looking at an e-mobility future where motor insurance will form only a fraction of our opportunity and profitability. Instead, we should consider the entire mobility ecosystem for volume and value growth – from charging to fleet management to servicing to connectivity. We need to shift gears to move forward and fast.
(6) McKinsey & Company (2022). Are insurers ready for the future of mobility?
(7) McKinsey & Company (2022). Are insurers ready for the future of mobility?
(8) Ernst & Young (2023). How auto insurers can grow as a decade of disruption approaches
(9) Ernst & Young (2023). How auto insurers can grow as a decade of disruption approaches
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