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The UK electric vehicle market and its impact to motor insurers

Updated: Nov 4, 2023

We’re in the midst of an electric vehicle (EV) revolution and this juggernaut is powering into the daily lives of consumers and businesses alike. The UK government has set ambitious targets for EV use and regardless of whether businesses are ready to adopt this technology or not, the simple fact is, it’s coming and it’s here to stay.

Whilst the sale of EVs is steadily increasing in the UK, it’s common knowledge that the infrastructure hasn’t quite caught up. And when we talk infrastructure, we don’t just mean charging points. Behind this revolution are many stakeholders and a much bigger story; buyers; repair shops; parts availability and skills and labour shortages to name a few.


Undeniably from an environmental aspect turning to electric is the way forward but it comes with its challenges for the motor insurance sector. The move to electric is quite possibly the biggest change to the motor claims market in decades and the team at Procurato has undertaken extensive research into what the electric vehicle impact could be to motor insurers.

Please find below a summary of our key findings. Please contact us to receive a full copy of our white paper and learn more about the EV market, its challenges and opportunities and what motor insurers need to consider in this evolving market (see the contact details below).

Close up of electric vehicle charging

Image Source : (Unsplash)


Key findings

The UK Electric Vehicle Market

  • Between 2016 and 2021 new sales of HEVs (Hybrid Electric) grew by 411%, PHEV (Plug Ins) by 329% and BEV (Battery) by 172%. This is a significant contrast from petrol vehicles which decreased by 32% and diesel which decreased by 85%.

  • Lockdown measures impacted car sales overall as production was halted and car show rooms closed. This has also had a knock-on effect of creating a parts shortage which is impacting repairs.

  • Despite infrastructure challenges – such as the provision of enough working charging points – cities across the UK are ploughing ahead with initiatives to ‘become electric’ and consumers are following suit.

  • The second-hand market is starting to emerge but there are challenges around the length of life for batteries.

Electric versus conventional – the differences in motor repair

  • EVs have typically less parts than their internal combustion engine (ICE) vehicle counterparts and research indicates that owners of PHEVs are spending half as much on maintenance and repair over the life of the vehicle than owners of similar ICE versions.

  • However, the Institute of the Motor Industry (IMI) has shown that some repairs come in at up to 400% higher depending on the part.

  • Cost and labour challenges are occurring when the Advance Driving Assistance System (ADAS) needs resetting on EVs. Unlike ICEs where the cost is low and can often be avoided by workarounds it is likely that the EV ADAS will need to reset at the dealer with some manufacturers enforcing it for warranty reasons. Resets at dealers cost more than non- dealers and there is the added cost of transporting the vehicle to and from the dealer.

  • Our research suggests that insurers are not fully understanding the differences required between ICE and EV repair; nor that they’re creating appropriate commercial partnerships with dealers to bring costs down.


Photo of EV charging port

Image Source: (Unsplash)


Parts shortages – the disruption of the supply chain

  • Thanks in part to the pandemic and well-documented supply chain issues such as the semiconductor shortage has led manufacturers to divert their production to their most profitable models or produce ‘unfinished’ vehicles. This is proving problematic for insurers as there is now a shortage of both new and used vehicles meaning fewer spare parts being available for repair thus lengthening repair time.

  • Whilst some analysts believe that semiconductor shortages will start to ease in H2 2022 as manufacturers create new capacity, however we believe the shortages will continue well in 2023 / 2024 as new facilities are built and whilst global shipping delays are still in play.

  • Body shops are estimating that the average delivery of spare parts is around 12 to 16 days; prior to the pandemic they could expect to receive 70% of parts within two days. There are even instances where products have not been available for over a year.

  • Vehicles manufactured by EV-only brands such as Tesla and Polestar face further problems. As demand for EVs has increased these brands have purely focused on new production – there isn’t a supply chain for parts albeit given their ability to design parts and components in-house they could have an edge over legacy OEMs if they change their approach. ICE manufacturers with EV variants are somewhat avoiding this issue for general parts such as headlamps or bonnets as there are no major differences between the ICE and EV versions.

  • Body shops are making huge investments in EV auto repair, yet this may not address the capacity issue. All EVs need their batteries decommissioned before work can start on them due to health and safety reasons. Once work is completed the battery needs recommissioned and potentially charged. This can take approximately two hours per vehicle, that’s two hours where the car is taking up space over a vehicle that doesn’t need this down time.

  • With part shortages increasing the length of time that a vehicle spends in repair, customers are needing courtesy cars longer. However, a shortage of EVs means that customers are often not getting replacement EVs but ICEs. This is posing a huge challenge for insurers’ customer propositions.

  • Our research suggests that insurers are not differentiating these complexities in their underwriting approach. They also need to be more realistic with their customers about the increased length of repair time.

Inside of a car engine with a soundbite

Does the UK have the labour and skills capacity to deal with repairs?

  • Research suggests that in December 2020 only five percent of mechanics working in dealerships and garages across the UK are qualified to work on electric vehicles. If this number doesn’t increase soon the number of EVs will outweigh the engineers who can work on them.

  • However, a mixture of Brexit, the pandemic and the ‘great resignation’ are leading to an exodus of mechanics.

  • Employers are reporting strong competition for skilled candidates and thus an increased wage bill and increased demands from employees for flexible working. This is adding further cost to the body shop owners which in turn is being passed on to insurers.

  • In addition to mechanical expertise concerns have been raised about additional risks including the education and training for first responders in the event of a car crash involving an EV given its ability to ignite up to four weeks post-accident.


Policy writing and claims

  • There are some quirks that make electric vehicles more expensive to insure than their ICE counterparts which insurers will need to pass on in the form of higher premiums.

  • Research has indicated that EVs are 40% more likely to hit pedestrians as they’re more difficult to hear coming.

  • Insurers also need to think about whether to offer breakdown cover should an electric vehicle run out of battery – this particularly applies in rural areas.

  • Parts shortages are also leading to insurers settling claims on a Constructive Loss basis because of accumulating costs.

We’ve established in our detailed research that insurers need a different pricing approach to EV motor claims than their ICE equivalents. There are several variants and considerations. To find out more please contact us to receive a full copy of the white paper and talk to us about how we can help.


The Procurato Way

Our experts at Procurato have years of experience in the insurance industry and work with several of the UK’s leading insurance groups. We will work with you and your teams to review your existing processes and systems to identify any gaps and importantly any opportunities in the electric vehicle market. We will review your supplier performance and identify where any contracts can be strengthened to the benefit of both parties and your customers. And of course, we’ll assess their operational capability so you know they will be there when you need them the most.

To receive a full copy of the white paper please contact Anna Pilipyuk: anna.pilipyuk@procurato.co.uk

For more information please contact John Gaynor: john.gaynor@procurato.co.uk


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