Nat cat, autonomy and EVs are reshaping motor insurance risk – Swiss Re

Natural catastrophes, autonomy and electrification are changing the motor risk landscape. Swiss Re’s Sophia Reich explains the emerging challenges the insurance industry’s underwriting, portfolio management and claims capabilities need to adapt to.

Key points:
Motor nat nat accumulation is growing
Underwriting and claims to evolve
EVs are changing repair economics 

Motor insurance is being pulled beyond the traditional model of driver accidents. Severe weather can damage thousands of vehicles at once, EVs are changing repair economics and increasing autonomy is introducing new questions around data, liability and systemic exposure.

Severe weather is adding another dimension to motor claims. While motor remains fundamentally an accident risk, Reich said, recent events have reinforced the need to view portfolios through a more explicit nat cat lens.

Nat cat is a motor risk

“Severe weather can affect thousands of vehicles simultaneously and generate substantial, geographically concentrated losses,” Sophia Reich, head of motor at Swiss Re, told Baden-Baden Today. “This can turn an otherwise diversified motor portfolio into a significant accumulation exposure.”

Recent market loss examples include around €1.3 billion of motor losses from the July 2023 Italian hailstorms and approximately CHF 800 million of motor own-damage losses from storms in Switzerland in August 2026.

Hail can be particularly damaging when highly localised storms hit densely populated areas, dealerships or fleet locations.

Flood presents similar concentration potential. Exceptional rainfall in the UAE in April 2024 contributed to approximately $300 million of market motor losses, according to Reich.

Motor liability can also produce less obvious catastrophe-scale exposures. In Spain in 2021, an electrical fault in a vehicle ignited vegetation and developed into a wildfire affecting around 22,000 hectares.

“A single vehicle-related ignition can therefore potentially turn a traditional motor liability exposure into a nat cat-scale event,” Reich said.

Insurers are responding through better forecasting, early warning systems, geospatial data, covered parking and more active portfolio steering. Vehicle connectivity could also allow more targeted warnings when severe weather approaches.

But Reich sees no single answer. “Effective mitigation requires a combination of underwriting, pricing, accumulation monitoring, claims preparedness and practical prevention measures,” she said.

More complex liability

“The industry’s ability to insure autonomous vehicle technology at scale will depend not only on advances in underwriting, but also on claims functions adapting to this changing risk landscape,” Reich said.

That shift is already visible well before full autonomy arrives. Liability is becoming more complex as responsibility moves beyond the driver to manufacturers, software providers, sensor suppliers and fleet operators.

“Much of the evidence required to establish liability will reside within the vehicle,” Reich said, pointing to data logs, software status, operating mode, sensor information and takeover requests.

Claims teams will therefore need expertise in data and software interpretation, accident reconstruction and product liability, while insurers will require reliable access to vehicle data if they are to establish responsibility and pursue recoveries.

Autonomy also introduces an accumulation potential unfamiliar to traditional motor portfolios, which insurers need to anticipate and adapt their underwriting practices, exposure management and product design accordingly.

“A common software defect, cyber incident or faulty over-the-air update could potentially affect many vehicles simultaneously,” Reich said. “That creates a more concentrated and systemic exposure than the independent driver accidents on which traditional motor insurance has largely been based.” 

“Recent loss experience means we need to apply a nat cat lens to motor accumulation management.”

Changing claims

Electric vehicles are already testing claims models in a different way. EV repairs tend to cost more and take longer than comparable internal combustion engine vehicles, although Reich stressed that the gap varies considerably between markets, models and types of damage.

According to the German Insurance Association (GDV), comprehensive EV claims were around 15–20% more expensive than comparable ICE vehicles during 2021–23, while Thatcham Research reported that UK repairs have been reported at around 25% more expensive and 14% longer.

“The underwriting response is better segmentation,” Reich said.

That means understanding vehicle type and usage, manufacturer and model mix, repair network availability, parts lead times and whether damaged batteries are repaired or replaced.

“As new brands enter the market and model ranges change more rapidly, insurers should also assess whether spare parts, software updates and repair expertise will remain available throughout the vehicle’s useful life.”

Repair cost inflation extends beyond EVs. Modern vehicles increasingly contain sensors and advanced driver-assistance systems that might help prevent accidents but can make claims more expensive when accidents occur.

“Headline inflation does not tell us enough about what is happening inside a motor claim,” Reich said.

Bodily injury has its own pressures, from wage growth and medical costs to shortages of care professionals, legal frameworks and changes in discount rates used to value future losses.

These issues will shape Swiss Re’s discussions with cedants in Baden-Baden, from how portfolios are being steered and where accumulations sit to whether treaty structures and event definitions properly reflect the underlying exposure.

As the risk changes, Reich said, both underwriting and claims will need to change with it.

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