A prominent South African insurer says there are no significant differences in insurance premiums on electric vehicles (EVs) and fuel-powered cars, but more data is needed for conclusive trends in this area.
In recent months, many Tech-Brunch readers have questioned…
In recent months, many Tech-Brunch readers have questioned whether the insurance premiums on EVs were higher due to the risks of damage to their expensive battery packs or fewer repairers.
Data from other markets with higher electric car penetration show that average electric vehicle insurance premiums are higher than those of petrol or diesel models.
For example, data from Confused.com indicates that EV drivers in the UK paid an average of 16% more in annual insurance fees than those with internal combustion engine (ICE) models.
The website attributes this difference to EVs having higher average prices and specialist parts than ICE models.
However, it also said some EV owners might find themselves paying less for insurance than a similarly priced ICE car because EVs have fewer parts susceptible to breakdown.
In addition, EVs generally have plenty of safety features that are unavailable on the average car, making them less of an accident risk.
We asked several major South African insurance companies whether there were any significant differences in their premiums for EVs and ICE cars.
Naked said it currently had no specific loading or discount based purely on whether a car was an EV or an ICE model.
It explained that premium pricing for each car model was dependent on how people who drove that model performed from a risk perspective.
“If there are enough EVs insured for the model to gather meaningful data, the pricing will implicitly reflect whether EV drivers, on average, present a higher or lower risk than drivers of comparable ICE vehicles.”
However, insurers’ pricing models are extremely sophisticated and take into account each individual’s unique combination of risk factors.
“This means that for one person, an electric vehicle might result in a lower premium than an ICE car of the same value, while for someone else, it could be the opposite,” Naked said.
Impact of expensive parts and repairs
Another insurer—Outsurance—said that more expensive EV parts and repair costs may attract a higher insurance premium.
However, it also said this cannot be considered in isolation. “All the underwriting factors, such as claims experience, driving experience, and more, contribute to the premium,” Outsurance said.
Naked said its data did not support the argument that parts and repair costs contributed to higher premiums for its customers.
Furthermore, if EVs become the norm, Naked expects technology and repairer certifications to improve, which would narrow any potential additional cost.
“As EV adoption grows, the repair network, risk data, and costs will likely change, and so will pricing. We expect that as volumes pick up, risk trends will likely diverge between ICE and EV,” Naked said.
Naked also told Tech-Brunch that it had seen an increase in electric vehicle insurance policies on its books in the last two years.
The most popular models were the BMW i3, BMW iX3, Mini Cooper SE, BYD Dolphin, and Volvo EX30.
However, the growth is gradual rather than explosive, with EVs and hybrids combined still only making up less than 2% of its total car insurance base.
Another pertinent question relating to insurance on EVs is whether they present a lower risk for theft than other models. Once again, the data is too limited for a definitive conclusion.
“We haven’t seen any major difference in theft or hijacking rates between EVs and ICE vehicles, but the numbers are still quite small. That makes it tough to spot a clear trend just yet,” Naked said.
“There is some thinking that EVs might be less of a target because they’re harder to strip and sell off in parts, but we don’t have enough data to confirm that either way.”
More: Driving license gold mine in South Africa.
Discover more from Tech-Brunch
Subscribe to get the latest posts sent to your email.
