While the festive period saw widespread discussion about EV adoption – especially following the government’s Christmas Eve consultation launch on phasing out petrol and diesel vehicles and the renewed commitment to the 2030 deadline – less attention was given to the EV insurance market. Yet, the insurance sector has been quietly working to ensure EVs remain competitive to insure, sustainable to repair, on the road, and contributing to the government’s vision of a cleaner, safer, and more prosperous future. 

The insurance sector has been quietly ‘getting on with it’, diligently working to help shape the UK’s transition to EVs. By focusing on understanding the unique risks associated with driving EVs, the insurance industry is playing a critical role in helping ensure that insurance costs do not hinder wider EV adoption by seeking to develop fair and accurate premiums. 

The diligence of the insurance sector is already paying off. Looking at motor insurance in general – average quoted premiums dropped by 6% in the last three months, the biggest fall on Consumer Intelligence record, and 8.8% across 2024. 

Following the significant inflation of 78.5% in 2023, Consumer Intelligence data revealed that EV premiums decreased by 12 percentage points in the first half of 2024, the largest drop among all fuel types. 

This is welcome news; however, regional variations mean that deflation is not consistent across the entire UK, and underscores the need for ongoing, agile, data developments to help accommodate the shifting landscape of the growing EV market.

So how can data help insurance professionals provide realistic quotes and assist on the roadmap to cleaner driving? Though EV insurance premiums have been dropping, they remain higher than their internal combustion engine (ICE) equivalents. And from a data providers viewpoint, this is largely due to vehicle repair costs. Data from the Institute for Energy Research reveals the average cost per claim for accidental damage was typically 35% higher for electric vehicles due to the more complicated technology in cars. High Voltage EV batteries are also expensive and prone to damage, as they can account for up to 50% of the vehicle‘s value, costing between £14,000 and £29,000. Data from Gecko Risk(^v) illustrate how overall costs and key to key times are reducing for EVs. UK BEV (Battery Electric Vehicle) repair costs and times have been dropping considerably since the start of 2023. This is mainly attributed to more capacity across repairs able to manage EVs, improved training and tooling – including diagnostics and better availability of parts. Many EVs feature sophisticated technology, electrified powertrains and safety systems requiring specialist knowledge or equipment to repair, so the more information an insurance provider can gain on a vehicle, the better equipped they are to understand these factors at point of quote.

A prime example of this is furthering our market’s understanding of Advanced Driver Assistance Systems (ADAS). EVs typically have 20% to 30% more ADAS features than the same or comparable ICE vehicle. Through data enrichment analysis, it is known there is a 31% reduction in claims frequency with the right type of ADAS features. The power of this knowledge is vital at point of quote but can also help during the claims process. Simply knowing what ADAS an EV is equipped with at claim can mean a vehicle is automatically directed to a specialist repairer with the correct repair equipment for ADAS calibration in house, so the work can be completed faster and more economically. 

Other important data insights at VIN level can also help shrink claims costs. For instance, battery type and drivetrain can differ greatly in EVs and their costs can vary hugely. The costs and challenges of battery diagnosis, repair and recycling weigh heavily on the repair market. As well as having the right repairers and equipment, it is important for diagnostics and repair methods to be publicly available. 

Data solutions are being developed to increase the knowledge pool surrounding battery health. Indeed, LexisNexis Risk Solutions is currently exploring over 50 new data variables on EV’s to assess their value in insurance in areas like battery health and drivetrain. This work is being further enhanced through the collaboration with Thatcham Research (^vi)who see insurability by design and more sustainable mobility and a key requirement for EVs. By investigating data variables at a granular level, the ambition is to get detailed data surfaced earlier, for example, knowing at point of quote, whether a specific battery could be repaired in the event of an accident.

Relevant data is key to understanding the varying risks associated with different EV models and drivers. By accurately pricing to distinct risk profiles, insurance providers can use lower rates to attract better EV risks while applying higher rates to mitigate potential losses from higher-risk segments. As the UK automotive industry engages in the ZEV mandate consultation, the insurance sector remains focussed on advancing data enrichment, encouraging greater collaboration, contributing to fair EV insurance, and helping ensure EV transition charges forward.