Insurers are facing rising costs for vehicle repairs, which are eating into profits. According to the Association of British Insurers (ABI), vehicle repair costs rose 33pc over the first quarter of 2023 compared to 2022, helping to push annual premiums to record highs.
Electric cars can be particularly expensive to repair, costing around a quarter more to fix on average, compared to a petrol or diesel vehicle, according to Thatcham Research, the motor industry’s research centre.
Particular worries surround the batteries, which are commonly mounted on the floor of the vehicle. This placement can make it more likely that it will be damaged even in a minor accident such as mounting a kerb.
Insurers have had a sepcific problem with unexpected inflation. They set the premiums before the inflation, by the time the repair bills came in hte inflation had happened. 10 or 12% sorts of numbers – that’ll kill a profit margin.
On the other hand interest rates are up so the profits from the float are too. Not wholly balancing but not, overall, an entire disaster.
But insuring EVs. I’ve seen stories that insurers are wanting £5,000 a year in insure one. Is that about right? Or is that an extreme being quoted for effect? The point being that it wouldn’t take much of a rise in insurance costs to entirely negate any fuel savings….