095: “Computers on Wheels” – The Future of Electric Vehicles with Steven Williams and Rob Durbin - Direct Line

Changing the Conversation: The People in Insurance

How are electric vehicles (EVs) likely to reshape the car insurance market in the next few years? How should you advise your clients around the use of EVs from an insurance perspective?

In this episode of the Insurance Broker Podcast, we’re very pleased to be speaking with Steven Williams and Rob Durbin, who are both at the forefront of Direct Line Group’s evolving strategy for and assessment of the electric vehicle market. In this revealing and informative conversation with Boston Tullis’ Sarah Myerscough, Steven and Rob reveal the fallacies in many common beliefs about how electric vehicles work, and dispel many outdated notions regarding the safety and reliability of the technology. Furthermore, they explain how the insurance market must adapt in order to facilitate manufacturers’ rapid transition towards electric vehicles, in light of the impending ban on the manufacturing of ICE (Internal Combustion Engine) vehicles in the UK, in 2030. Listen now to hear their fascinating insights into this rapidly evolving market for both consumers and business owners.

Quote of the Episode

‘Cars are becoming computers on wheels.’

The technology behind EVs is extraordinary, and has undergone rapid evolution since these vehicles were introduced to the mass market around ten years ago. As such, there remain some prevailing myths regarding the safety and efficiency of these vehicles. Fears of the car battery losing charge and anxieties about not being able to find a charging station whilst on the road continue to prevent many drivers from taking the leap to electric vehicles. Yet, at full charge, most new EV releases are capable of running for 200 miles or more. Most drivers, especially post-pandemic, don’t travel all that much, and therefore this mileage capacity is more than sufficient. Nonetheless, the EV industry isn’t without its growing pains.

Key Takeaways

Electric vehicles are an emerging risk. They are relatively new to the market, at least on a wide scale, as they work very differently from ICE vehicles. While the electric vehicle market is the only motor market that grown in the last 18 months, there remains a generalised perception that they are hugely expensive. This is compounded by the costs of insurance, which are particularly high for electric vehicles. A key reason for this is due to the fact that, in the event of an incident causing damage to the car battery, it will be immediately decommissioned. An EV battery can be worth as much as 75% of the cost of the vehicle. Consequently, insurers face higher claims costs if and when EVs are involved in accidents, leading to higher premiums for customers to pay.

Nonetheless, EVs are undoubtedly safer than ICE vehicles, and they typically include many advanced safety features to significantly reduce the risk of accidents on the road. This technology undoubtedly presents great opportunities for manufacturers, insurers and consumers alike, with advancements in vehicle safety and efficiency and improvements in the speed of insurance resolutions already underway. Yet, there are still great costs to account for.

However, there are alternative methods for becoming an EV driver available. New ‘usership’ models are currently being developed, which mirror the basic premise of a subscription service, by which you play a fixed monthly fee, including maintenance costs, insurance and tax, for access to an EV. This new market is experiencing a significant buzz, enabling drivers to use these environmentally friendly vehicles at a much lower cost overall and at great convenience. Salary sacrifice schemes are also available, granting companies a more affordable means of granting their employees access to an EV fleet.

There remain a lot of unknowns in the EV world. While the car insurance industry has decades of history with ICE vehicles, we have only 10 years of data and understanding to inform decision-making about electric vehicles. As such, insurance professionals are learning all the time, but adaptation to what will in future be an EV-dominated market remains a work in progress.

Best Moments/Key Quotes

“Although EVs have been around since about 2013, they are probably considered nothing new at the moment. What is new is the apparent rise in their popularity and numbers and affordability. That's being driven primarily for a few different avenues. There's a lot more conscientiousness in the public around climate change. Also, the cost of living, cost of fuel prices, especially last year, was driving a lot of people to shift to EVs.”

“For ICE vehicles, we have decades and decades worth of information. On EVs, it goes back to 2013. So, every month, we're learning and there's so many more models of EV that are going to come out in the next three, four or five years. Certain manufacturers are only going to be delivering ICE vehicles from 2025-2026 ahead of the legislation in 2030, which says you can no longer sell ICE vehicles, it has to be a plugin, either hybrid or, or [electric].”

“Clean air is the ultimate benefit of all this. Therefore, if we can help our customers make that transition, that's good for them, good for us, but also good for the wider environment.”

Resources

Direct Line – A Complete Guide to Electric Car Insurance: https://www.directline.com/car-cover/magazine/electric-car-insurance

Direct Line – Electric Made Easy: https://www.directline.com/car-cover/electric/electric-made-easy

About the Guest

Steven Williams is the lead of Direct Line Group’s EV strategy. In this role he assesses and coordinates EV activity across the business, giving a voice to EV drivers and thereby ensuring that the company’s decisions are futureproofed as this technology becomes increasingly popular and accessible in years to come.

Steven Williams’ LinkedIn Profile: https://www.linkedin.com/in/steven-williams-4978a213/

Rob Durbin works in the commercial side of Direct Line Group as the dedicated EV and flexible fleet underwriter for the business. In this role, he assesses Direct Line’s decision-making with regard to EVs from an underwriting perspective.

Rob Durbin’s LinkedIn Profile: https://www.linkedin.com/in/robdurbin88/

About the Host

Sarah Myerscough is the Sales and Marketing Director of Boston Tullis Group. As the founder of The Insurance Brokers Podcast, she brings a wealth of experience and a fresh perspective on communication in the insurance sector. Boston Tullis works with insurance professionals to build effective communication both internally and externally through podcasting, event reporting, videography and internal communications facilitation.

Website: https://bostontullis.co.uk/

Evaluation Link: https://s.bostontullis.co.uk/s/podcastevaluation