Insurers in the United Kingdom have pushed back against allegations of profiteering following a substantial 50 percent increase in the cost of insuring electric vehicles (EVs) in 2023. This surge has resulted in drivers in the country now paying nearly double the insurance premiums compared to owners of internal combustion engine (ICE) vehicles.
Insurers assert that they are constrained by factors beyond their control, emphasizing that premiums are dictated by claim costs and frequency. According to their explanation, accidental damage claims on EVs are reportedly 35 percent more expensive than comparable repairs for combustion engine vehicles.
At the close of 2023, insurance premiums for EVs reached an average of £1,344 (approximately US$1,700 at current exchange rates), according to reports from Bloomberg. Insurers cite various factors contributing to this notable increase, including the elevated cost of repairs, a scarcity of mechanics trained in EV servicing, and extended garage times for these vehicles.
Carl Shuker, CEO for the UK and Ireland at Howden Group Holdings, noted, “You've got length of repair times going up, you've got the cost of the component parts going up, and you probably see more EVs written off because residual values are particularly low at the moment.”
The heightened insurance rates are exerting pressure on the EV market, which is exhibiting signs of a slowdown. The UK and Europe, as a whole, are grappling with a cost-of-living crisis, while the growth of charging infrastructure appears to be stalling.
Despite the Tesla Model Y securing the top-selling vehicle spot in Europe in 2023, the EV market share did not witness growth in the UK for the first time in recent years. Notably, the American crossover was the sole fully electric model within the top 30 of the continent's sales charts. Studies have also indicated that Tesla EVs tend to incur higher repair costs compared to most other electric models, with only marginal differences compared to combustion vehicles.