Spotlight: Do insurers dream of electric fleets?

The New Year rang in the beginning of the end for petrol and diesel vehicles in the UK. With the 2030 deadline set to curtail the sale of new ICE vehicles, and a government directive mandating that this year over 28% of new car registrations must be zero-emission, the nationwide EV focus just got real.

Emphasis on eco-friendly transportation is growing. Forecasts suggest that battery electric vehicle (BEV) sales will reach 440,000 units in 2025, but even this impressive figure – significantly higher than the 382,000 sold in 2024, represents just 22% of all car sales, falling short of the 28% mandate.

The government’s fast-tracked industry consultation on how to meet the 2030 deadline and smooth the transition to zero-emission motoring closed last week. As we await the outcome, uncertainty remains around whether the UK insurance sector is ready to adapt to this swiftly changing landscape.

As part of this Spotlight series, Insurance Post spoke to several insurers – Axa, Admiral, Ageas, Aviva and Allianz. These big names are leading the way in gearing up for an electrified future, actively innovating and modifying their offerings to cater to the specific needs of EV owners.

And it seems that industry sentiment towards electric vehicles is shifting significantly with many insurers now interested in ‘covering the drivetrain’ to gather valuable data to help deepen their understanding of the changing automotive landscape. This level of data-driven insight is essential for accurate pricing.

Falling behind in the EV race

Unfortunately, however, the insurance industry’s willingness to learn about and move into the EV space faces some significant barriers. One such roadblock is the lack of a proper classification system for EVs within the General Terms of Agreement (GTA) system which can lead to inefficiencies and disputes. 

This is understandable from the GTA given the stark disparity in EV ownership between the north and south of the UK and the supply imbalance. Without a benchmark within the GTA for EVs, some credit hire companies can charge higher rates with little negotiation, so inclusion would help to remove some of the uncertainty on credit hire costs recovery, as well as claims friction and unnecessary litigation.

EV replacement

Another area in which insurers are struggling to keep pace with the high expectations of electric vehicle owners is like-for-like vehicle replacement. A recent Europcar survey (conducted by Vypr, Jan 2025) found that 89% of EV drivers would expect to be provided with an electric replacement vehicle while theirs was being repaired after an accident.

To date, insurers unable to offer electric replacements have found consumers are usually content with an ICE replacement vehicle while their EV is repaired, as long as the repair is quick, and their premium remains low. As EV ownership grows, however, customers will be less willing to compromise when it comes to getting a ‘like-for-like’ EV.

For salary sacrifice or fleet customers, there is also a ‘benefit in kind’ (BIK) consideration and personal tax liability for driving an ICE vehicle which will make the conversation more complex. 

Being able to offer ‘like-for-like’ could become critical for policyholders’ financial circumstances.

James Roberts, Head of insurance sales, Europcar

Insurance Post’s research highlighted that underwriters believe many EV buyers are crystal clear about why they made their choice and expect to be provided with a like-for-like replacement. 

Often, it’s a conscious decision about impact on the environment; for others it’s the cost savings. EV specialists in the market note how the insurance industry is demonstrating a lack of awareness as to why drivers choose electric, and their expectations regarding EV replacements. 

Now is the time for insurers to adapt their offering to meet the changing demand and the transition towards EVs, to get suitable propositions in place and secure EV customers today.

The Insurance Post study of industry professionals revealed that 42% offer only a limited selection of EV options for electric vehicle owners. More than a third (37%) noted the biggest challenge to providing this option was limited availability of EVs from their replacement vehicle supply chain – a situation made worse for those relying on a single supplier.

The future of electrified motor insurance

The revised GTA represents a positive move towards a more efficient and effective framework, tailored to meet the evolving needs of the industry. But it is not yet able to go far enough for EV insurers and customers.

As demand continues to rise, exceptional customer service and adaptive solutions must be prioritised. Repair professionals must be equipped with the necessary skills and knowledge to handle the unique requirements of electric vehicles, ensuring that they can service, maintain and repair the growing number of EVs in the UK vehicle parc.  As discussed in a previous Spotlight, this requires significant investment from the aftermarket sector for the training of specialised technicians and claims handlers.

In the evolving landscape of the increasingly eco-conscious automotive industry – and for motorists’ sake – it is crucial to broaden the scope of partnerships beyond the traditional supply chain. 

Many insurers and underwriters are finding that collaborating with a rental company such as Europcar, with its robust national network and a comprehensive fleet of electric cars and vans, is invaluable for mitigating supply challenges, meeting EV-related targets and delivering the best possible customer experience.

Read more about how Europcar is helping insurers deliver sustainable replacement vehicle solutions

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