Why the growth of electric vehicles poses a challenge for insurers
Charley Grimston, managing director of insurtech platform Altelium, which leverages Artificial Intelligence (AI) to provide real-time reporting on battery transmissions, told Intelligent Insurer that the risks posed by electric vehicles are very different. The batteries used pose very different risks while the vehicles pose other challenges such as the risk of cyber attack.
Grimston says that online electric car queries rose by 162 percent after the government proposed to halt petrol and diesel sales by 2035. And, while the appeal of electric and hybrid vehicles is growing, the depth of information on electric vehicle batteries that is required to underpin warranty and price insurance policies has been relatively limited.
Electric vehicles use lithium-ion batteries, but these come with their own unique risk, according to Grimston. While traditional lead-based batteries have their own industrial standards developed over a number of years, electric vehicle battery technology is continually evolving - and so too are the risks associated with them.
“There are new risks associated with lithium batteries,” Grimston said. He highlighted that high powered, high voltage vehicles represent a hazard as well as new risks associated with charging the vehicle. Grimston also pointed out that electric vehicles could be more susceptible to cyber risk.
Another challenge for insurers comes when these batteries reach the end of their useful like in vehicles. Some are then converted to store renewable energy.
“A battery's second life is used to pick up excess energy from wind and solar farms, to then sell that energy to the grid. But in either life you can’t avoid the fire risk associated with the batteries,” he added.
Altelium is an insurtech platform that leverages AI to provide real-time reporting on battery transmissions. The platform monitors battery and user behaviour to record the state of health of electric batteries in vehicles, wind turbines, machinery and stationary storage.
This growth of real-time reporting and the use of AI led Grimston to believe that the insurance process for electric vehicles will become more intrusive. “Insurance on electric vehicles is going to be more intrusive than it has been on combustion engines as I think there will be more data logging, providing constant data feedback to insurers,” he said.
The insurtech platform has a team of data scientists working to better understand the first and second life of batteries. And, on the underwriting side, Grimston’s own company, CNC Asset Limited, acts as the platform’s own in-house Lloyd’s Managing General Agent. Altelium now has plans to enter overseas markets in Asia and North America as well as plans to develop new warranty products.