Take-up of electric vehicles (EV) in Australia is still low compared to the US, Europe and even New Zealand. Battery-run vehicles made up less than 2% of Australian new sales in 2021. That’s about 21,000 in absolute numbers.

However, that is set to change as Australia speeds up the transition away from petrol and diesel-powered internal combustion engine (ICE) vehicles. In September 2022 the Federal Government launched a discussion paper for its National Electric Vehicle Strategy, seeking feedback on ways to increase the supply and uptake of electric cars.

Transport is Australia’s second largest source of national emissions, according to the paper. Most transport emissions are from road vehicles. Reducing these emissions will be critical to achieving the country’s emissions reduction target of 43% on 2005 levels by 2030 and reaching net zero emissions by 2050.

The green transport revolution needs insurers who deeply understand the nuances and risks associated with EVs, and that’s just where Zurich Australia has an edge. With experience gained from its sister businesses in Europe and the US, Zurich knows what’s needed. The risks associated with EVs are significantly different from “traditional” motor cover.

“We are exploring an EV proposition across all facets of the business which will include product, pricing, underwriting, claims, risk management etc.,” National Underwriting Manager Motor Fleet Craig Sandy says.

“We have a long-term objective to develop a sustainable product offering for the market. This will involve updating existing products by amending and adding definitions specifically to include electric vehicles.”

Mr Sandy says Zurich will design its EV cover to include accessories such as spare parts, charging cables and adaptors.

“We need to also consider the liability aspect whereby we include cover if liability arises out of an incident caused by or in connection with the charging of an electric vehicle,” he says.

“The other aspect to consider is the cyber risk and coverage.

“We believe that the landscape will change significantly over the next decade, but it may be a two-tiered approach – one for metro and one for regional.

“As we progress with policy, infrastructure, incentives, supply, technology etc, the percentage of new car sales will increase. We are seeing this happen now.

“As an insurer, we need to be prepared with particular focus on product, pricing, claims proposition and our repair network capability for EVs.”

While it’s still early days, there will be challenges as more EVs take to the road. The experience observed in other markets, particular around parts availability and lack of specialist repairers, all of which add to claim costs, will probably play out here too.

But Zurich is acting early to mitigate any potential fallout. Mr Sandy says the Australian business has been collaborating with its colleagues in Europe to analyse claims data for EVs, including both frequency and severity.

“We expect that the average repair cost will be higher, and this will have an impact on pricing levels for EVs initially in Australia,” he says. “However, as drivers get used to EVs and costs start reducing due to parts being available locally in addition to there being more EV repair specialists, we may then expect to see some parity at a pricing level.

“We need to start preparing now and at Zurich we are starting to prepare now.”

Zurich Resilience Solutions (ZRS) Senior Risk Engineer Fran De Sanary says new sustainable technologies do present new challenges. But the business is ready for the green challenge.

The ZRS unit globally has more than 800 specialist engineers working at cutting edge pro-climate solutions for a range of risks including motor and property.

“Recognising the changing landscape, Zurich Resilience Solutions has the ability to complement services with data analytics and consolidation of the client’s data streams, in effect distilling the multitude of data streams into key operational dashboards,” Mr De Sanary says.

“Now we are seeing the streams of data available for analysis becoming vastly more complex. As we continue to digitise, vehicles will become smarter still, vehicle smart charging will become the norm and vehicle-to-grid opportunities will evolve. The complexity and amount of data available will [also] increase.”