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[00:00:00] Paul Lucas: Hello everyone, welcome to Insurance Business TV and a very special edition as we take a look at the rapid adoption of electric vehicles and their impact on the insurance sector. Of course, government targets are in place for 80% of new cars to be zero emission by 2030 with EVs poised to take over. But beyond those questions around charging infrastructure and whether drivers are ready to make the switch, what does it mean for the insurance sector and where and how can brokers and insurers prepare. To dive into the issue, we welcome a genuine expert on the topic, James Roberts, Head of Insurance Sales at Europcar. James, welcome to Insurance Business TV.

[00:00:36] James Roberts: Yeah, nice to be here. So James, why do you think the UK insurance industry is holding back when it comes to full EV adoption? If you look at some market stats, on average it costs 25% more to repair an EV than it does ICE. and it's almost twice as likely for an EV to be written off following an accident than an ICE equivalent. Therefore, you can see there is a significant delta between ICE and EV. There's also additional complications in that with the EV market, there are significant new entrants arriving in the UK, and they are still having to build their infrastructure. What this presents to the insurance market is a risk around part delays, around the ability to find a suitable repairer and cost control. So what we're seeing in the market is you've got two types of providers. You have the insurers who want to learn from other people in the marketplace and you have those early adopters, possibly MGA specialist EV underwriters that see this as an opportunity to go first. What tends to happen is the market relies on data and because that data on repairs is only starting to build now, there's been a slowness on take-up. But with the ZEV mandate fast approaching and the number of EVs which are being sold in the UK increasing, we are seeing that gap change. And we are seeing more of the general insurers come to the market with an EV-specific solution. So I think it's just a case of people don't necessarily want to be first, and they want to learn from the data they have before they go full steam ahead.

[00:02:02] Paul Lucas: Okay, so it sounds like there are some gleams of optimism there. But do you think there is a habit in general within the insurance industry to rely on a sole supply partnership?

[00:02:12] James Roberts: Absolutely. So if you look at the insurance industry, there are three services that all insurers will buy. They'll buy legal services, they'll buy repairs, and they'll buy hire. But if you talk to the insurance industry about legal services, they will have a panel of solicitors who are on hand to deal with different jurisdictions, complex personal injury, debt recovery, and liability disputes. So they have a good choice when it comes to legal services. It's the same with vehicle repair as well. You will have a tier one and tier two repair network. You have a contingency if there's a surge in demand. You have experts that can coach build. You have repairers that can deal with EV. But when it comes to vehicle hire, several insurers are still using... one rental supplier for all of their rental needs. We've talked about the change and the uptake in electric vehicles. And actually, one supplier probably can't provide the service that all customers need. So I think there has been some delay in insurers moving to a multi-supply chain.

[00:03:17] James Roberts: And I think the customer plays an important role in this because If the service they're buying isn't fulfilling against their exact needs, that will put pressure on the insurance company to go to the market and start to add competition. So I think there has been an over-reliance, but I think with consumer duty playing a big part in an insurance decision-making criteria now, you will see people like Europcar and other people who are specialising in EV. being given an opportunity to work closely with the insurers moving forward. I think they're further ahead with legal services and repair than they are higher, and I'm sure that's an area they're going to be looking at shortly.

[00:03:55] Paul Lucas: So it sounds like it's fairly complicated for insurers perhaps, but they are making slow adjustments. So what would you describe as the positive versus negative elements of sole supply in this new EV era?

[00:04:04] James Roberts: The positive for sole supply is you get to build a relationship with one supplier. You get to evolve and learn with that one supplier. Of course, with sole supply comes some commercial upside, because if you're given one supplier, all of your volume you should be able to drive a better deal. You may you will only have to manage a smaller supply chain than you would if you have multiple suppliers on board. So it becomes easier doesn't it to manage one supplier and several. But actually I think there are more benefits in multi-supply. What you don't have with sole supply is competition. There becomes a bit of complacency from your supplier if they know that they're guaranteed to receive 100% of your work. And therefore, promoting competition, I think, is the best way to control price. And it ensures that the market is innovating. If you know that you are only going to get a share of that supply based on your service, you're going to invest more money in your offering. You're going to try to ensure that you have a lean process. And you're going to continue to innovate to make sure the product that you're providing meets the ever-changing needs of the policyholder.

[00:05:17] Paul Lucas: I'd love to know, James, as well from your experience. I imagine you have experienced this. Are EV drivers happy to be put in ICE, internal combustion engine replacement cars, if the vehicle is in for repair? Or is that something they have a bit of a problem with?

[00:05:29] James Roberts: I wouldn't say they're happy to be placed into an ICE vehicle when they're driving an EV. But if you look at a personal lines customer, for them it's about being kept mobile. Therefore they're not happy, but they're prepared to be placed into a nice vehicle for the duration of their repair. However, if you speak to a company car driver who there will be a benefit in kind penalty for moving from EV to ICE, their answer will be, no we're not happy. We made a decision to drive EV. We're being taxed on driving an EV and there will be additional work they'll have to do to report the tax change if that vehicle repair does exceed 14 days. From Europe Cars Research, we spoke to policyholders and 89% of policyholders expected to be given an EV vehicle for EV replacement. And out of those 89% of people we surveyed, 65% said their needs were met, which meant there was still 35% of people who didn't receive the entitlement they thought they were going to get. We also surveyed insurance professionals and 39% of those professionals said that they were not convinced they had a suitable EV supply chain to meet the needs of their policyholders.

[00:06:49] James Roberts: So that in itself tells you that there's still some work to be done and we're here to be able to offer support to insurers and to their supply chain if they want to learn more on that aspect of dealing with the customer.

[00:06:57] Paul Lucas: Yeah, it's really interesting isn't it to discover how the needs of an EV driver are different from a regular vehicle driver. But what would you say then are the main elements of customer care that the insurance industry needs to remember when it comes to EV driving?

[00:07:08] James Roberts: I think some of the main points are that the needs of an EV customer is very different to the needs of an ICE customer. There are other challenges that claims handlers need to consider when dealing with an EV customer. There'll be issues around charging, around software and sustainability. We know that the claims experience is a critical point in a relationship between a policyholder and insurer. And a good claims experience is one which will buy loyalty from the customer. We also know that the claims experience is an area where there is scrutiny by the regulator. So doing right by the customer is vital here and making sure you appreciate that they've chosen an EV vehicle should be considered. So, your car has made significant investment in our EV solution. And we are trying to offer price parity to make sure that price isn't a barrier for an insurer providing an EV policyholder with an EV vehicle. And therefore, I think it's just a case of making sure you can differentiate between how you treat an EV customer and how you treat a nice customer and making sure they appreciate and understand that they bought an EV policy and the entitlement that comes to that policy is being delivered by their insurer.

[00:08:18] Paul Lucas: And of course, Europcar is very much at the forefront of this as well James. So how is Europcar working with the UK insurance industry to help with the evolution of EVs?

[00:08:27] James Roberts: Yes, so Europcar, we've been running an EV fleet for several years now. So we've gained a lot of experience from purchasing vehicles, managing rentals, and dealing with the service maintenance and repair. What this has given us is a good knowledge of repair costs and downtime, WLTP range, charging speeds and VOR by manufacturer. We're prepared to share this information with all of our customers and our prospects and what we've done over the last few years we've developed our own training and development suite. So the data we've amassed from dealing with accidents, we are able to share best practice in how to deal with an EV customer, whether that's at roadside or whether that's dealing with the repair. What we've created for our insurer customers is the ability to actually log into our own training suite and to help their users understand each stage of... managing and owning a repair vehicle. So we've given them the knowledge that we've gained from managing a fleet. This will help claims handlers with dealing with a distressed customer when it comes to battery degradation, when it comes to software queries, and when it comes to just understanding what replacement vehicle to give an EV customer based on finding the most suitable alternative. We've also gone one step further with some of our major insurance customers. We've given them access to our rental station network where they can actually come into our rental station, meet with EV dedicated staff and actually understand how we prepare an EV vehicle, how we hand it over to the customer and how we deal with any in-life vehicle error or damage claim that may arise. So we've kind of got an open book policy with all our customers to say, whatever we've learned over the several years of dealing with EV customers, we're happy to share with you, even to the point where we've tailor-made training and development programs for insurers. And I think we're going to continue to do that because we know that there is a lot of change in the market. And if we can help our customers fast-track their knowledge, that feels like the right thing to do.

[00:10:17] Paul Lucas: Excellent stuff. I'm sure there's going to be a lot of people reaching out to your car on the back of this, James Hughes. Thanks for your time today. Of course, remember, if you want to keep up with the latest developments around EVs and indeed the insurance sector, well, keep it right here on Insurance Business TV.