International and national policy measures to reduce carbon emissions, increasing environmental consciousness of consumers, as well as steady technological improvements are seen to be contributing to an accelerated transition to electric vehicles (EVs): according to the Paris-based International Energy Agency (IEA), more than one in four car sales worldwide is expected to be an electric vehicle by 2030.
The presence of EVs on the roads poses new challenges to insurers: in absence of claims experience and with EV technologies developing quickly, conventional risk models fall short of reflecting differences in risk between ICE vehicles and modern EVs, thus diminishing insurers capabilities to accurately price EVs.
Electric vehicles are, in fact, different in many ways: not only is the technology inside a modern EV fundamentally different from traditional combustion engine vehicles, but the transition to low-emission vehicles is often accompanied by a change in driving behavior and typical usage profiles. As this new technology is one of the key ingredients of the future mobility mix, insurers need to build a strategy to strengthen their capabilities in assessing the risks of EVs.
The Swiss Re EV Risk Score acts as a risk modifier to a conventionally derived risk premium for internal combustion engine (ICE) vehicles. By providing a pricing support tool in the shape of numerical scores, we enable insurers to extend their traditional risk model developed for ICE vehicles to electric vehicles without having to build a dedicated risk model from scratch.
With our score, insurers can benefit from an improved risk segmentation and better pricing transparency for EVs, ultimately providing more competitive and fair premiums to EV drivers.