ICA Calls On Insurance Companies To Play Their Part In Transition To EVs

The Insurance Council of Australia (ICA) says the next 10 years offers a “critical window of opportunity” for the insurance industry to play its part in enabling the transition to EVs, from supporting driver education and partnering with EV charging providers to collaborating on repairs and offering tailored insurance products.

In its report, Charging Ahead: Electric Vehicles & Insurance, the council said there is a “clear role for insurers” to unlock the opportunities the transition presents, as well as managing potential risks.

One of those risks is fire, but the council said research indicates that EVs are not a greater fire risk than internal combustion engine vehicles (ICEVs). Additionally, data in global markets including the UK and Sweden suggest that fires in EVs are less common than in ICEVs. However, EV battery fires must be approached differently to those occurring in ICEVs and may require more time, resources and water to manage incidents.

Additionally, Fire and Rescue NSW (FRNSW) said that as EV fire incidents have potentially higher consequences than ICEV fires, enhanced firefighting measures may be required in buildings.

To safely manage EVs involved in collisions and fires, the ICA said investment in research and training for first and secondary responders will be essential, in addition to educating consumers about safe EV maintenance and training.

“Enhanced training for first responders (fire, police, paramedics) and secondary responders (tow trucks, salvage yards and recycling) is critical to enable safe management of electric vehicles involved in collisions and fires.  FRNSW is partnering with other fire services, government agencies, research institutions and industry to examine best practice response to EV fires in structures,” the ICA said.

“As the Australian market matures and EV charging technologies continue to evolve, regulations and standards will need to keep up with the pace of change. There is also an opportunity for government and the industry to work collaboratively on evidence-based risk modelling to inform decision-making on the transition to electric vehicles.”

The ICA also addressed EV insurance costs, which can be higher compared to ICE vehicles due to factors such as higher asset value, repair delays and increased repair costs. However, the council believes some of these challenges could be addressed by measures such as government investment in the upskilling of existing technicians and training new technicians to work on EVs and associated infrastructure.

Australians bought 87,217 EVs in 2023 – a record high – with sales rising around 33 per cent in the first quarter of 2024.