Over 11% of UK consumers now have a hybrid or electric vehicle (EV), according to GlobalData’s 2022 UK Insurance Consumer Survey. This figure has been rising steadily over the past three years, with indications that a further swathe of drivers look set embrace EV adoption in the next five years.
The transition to EVs is seen as a major milestone for many major economies in the green revolution. The rate of EV adoption has been variable across countries, but as the EV market develops, there will be considerable change in the makeup of the UK motor parc over the coming years. With a rising number of legacy original equipment manufacturers (OEMs) and a catalog of burgeoning start-ups bringing viable and affordable EVs to market, it is likely that this rate will accelerate in the future. GlobalData’s 2020–22 UK Insurance Consumer Surveys indicate that the percentage of consumers who have a hybrid electric vehicle (HEV) or battery electric vehicle (BEV) has risen from 6.9% in 2020 to 11.6% in 2022.
Furthermore, fresh insights from our 2022 UK Insurance Consumer Survey suggest that almost 40% of consumers not driving a BEV will be looking to switch to such a car within the next five years. A further 12.2% indicated that they will do so in six to 10 years. In sum, this suggests that over 50% of the cohort of non-BEV drivers looks set to purchase a BEV within the next 10 years. Given that another 21.3% of consumers are not sure, it is likely that some of this group will also look to purchase a BEV in the next decade.
These figures are important to insurers. The EV transition is well underway and will only accelerate over the coming years. Many leading insurers have established a dedicated EV insurance product, showing a recognition that EVs are perhaps more nuanced to insure than traditional combustion vehicles. It is important for insurers to understand more about the maintenance and risks of EVs before they become truly widespread. These risks largely center around the battery, which remains expensive to repair or replace, especially with a nascent network of repair shops throughout the UK. Fire risk also remains a well-documented issue surrounding EVs, with a series of high-profile incidents involving vehicles both in and out of use at the time.
The proliferation of EVs will be the most significant change to the motor insurance landscape in decades. Insurers are working well to learn and understand the differences and pain points for these new-age vehicles. Understanding and mitigating these key risks associated with EVs will be one of the major success factors for insurers in the coming decade.