Electric opportunities for total loss claims

The Barometer of barriers to switching to EV from Europcar for Quarter 1 2024 has identified that almost two in three (63%) private drivers have so far been put off making the switch because of purchase and maintenance costs.

Half of private drivers also see the lack of charging infrastructure as a barrier, despite the fact that the availability of electric vehicles is getting better all the time. Indeed, the charging infrastructure has grown significantly in the last 12 months.

What both these data points seem to suggest is that there is still a lack of knowledge about EV driving and ownership. And really there’s only one way to overcome these barriers: getting motorists behind the wheel of an EV for a real-world experience.   

The benefit of experience

The job that needs to be done across the motoring landscape – from the government and charging companies to the OEMs (original equipment manufacturers) and insurers – is to overcome fear, uncertainty and doubt about electric motoring.

Motorists need to experience electric motoring first-hand – and in real-world conditions (not just a short test drive) – to see just how easy it can be.

If supported by a dedicated insurance contact centre and team of EV champions, this can only help this solution play a fundamental role in encouraging more internal combustion engine motorists to try an EV in the real world, thereby shifting perceptions.

A recent government inquiry by the House of Lords Environment and Climate Change Committee highlighted that “progress is not happening fast enough, and major barriers remain”, including charging anxiety and the cost and availability of vehicles. A pervading culture of misinformation was also identified as a key issue in deterring motorists from making the switch.

Clearly there are still some big hurdles to overcome. However, we have identified that the less-than positive experience of a total loss could be an ideal entry route for drivers to find out more about electric motoring, and how it can work in their lives. We are already working with several insurance providers to get more drivers behind the wheel of an EV, to test drive the experience and break down both misconceptions and barriers to switching.

Turning a Total Loss into an electric gain

When a customer’s vehicle is deemed a total loss, many insurers must leave the replacement vehicle provider to offer whatever is available from their local branch for the required time, often making little to no reference to the policyholder’s needs. However, we believe an electric alternative can not only enhance the customer’s claims experience but also bring electric driving to a wider motoring public.

When offered the option of an electric replacement vehicle, the policyholder with the total loss gets a ‘try before you buy’ EV experience without having to think about any of the barriers. If supported by a dedicated insurance contact centre and team of EV champions, this can only help this solution play a fundamental role in encouraging more ICE (internal combustion engine) motorists to try an EV in the real world, thereby shifting perceptions.

We work with insurers to agree when to offer policyholders an EV instead of a like-for-like ICE vehicle. The agents then contact the policyholder to discuss the options in detail. Once the customer has selected a vehicle, we can deliver it to their home or work address, for ultimate convenience. Currently, we are seeing one in three policyholders that are suitable for the offer of an EV as a replacement vehicle happy to give electric motoring a try.

Winning EV customer loyalty

The other big conundrum for insurers stepping into the EV market is how to handle customer expectations when it comes to replacement vehicles. According to the SMMT, sales of fully electric cars hit the 1m mark at the start of 2024, putting new pressure on insurers to provide EV replacements. And with Consumer Duty now a big focus for insurers, it is critical that the replacement vehicle supply chain is fit for purpose. 

Relying on a sole supply partnership brings vulnerability to regulatory scrutiny if a policyholder’s choice is limited. It also puts the customer relationship at risk. Replacement vehicles form a fundamental component of a motor insurance claim, and a lack of suitable options can be catastrophic for customer satisfaction. In contrast, if the service goes above and beyond expectations it leaves a lasting positive impression. 

 

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