Page 35 - Insurance Times July 2024

manufactured by a third party instead of an OEM is used electrolytes enable the battery to work even at temperatures
and a risk event occurs. down to minus twenty degrees Celsius, as opposed to the
current generation of batteries that work at temperatures
Finding their own turf between zero and forty degrees Celsius.
The maturity of EVs and an increase in the variety of models
characterize the second stage. EV components such as Solid-state batteries with higher energy densities replace the
batteries become safer, and the charging infrastructure also liquid electrolytes in a lithium-ion battery with ceramic or
improves considerably. The dominant design for EVs and their other solid materials to reduce the fire risk. Lighter batteries
components emerges. There is an exponential growth in the with improved thermal stability, faster charging capabilities,
and a range exceeding 1,000 miles per charge are available.
market share of EVs, and government incentives are
gradually reduced. There is an extensive collaboration of The electric motors become more stable with optimized
cooling, increased controllability, and reduced installation
OEMs and regulators, and the standards are created. At this
stage, EVs are poised to cross the chasm that typically follows space. Uniformity standards are defined for the charging
the early adopters in the technology adoption life cycle, equipment, making them agnostic to the make or model of
moving towards finding mainstream buyers among the early the EV. The reduction in vehicular weight also improves the
majority. vehicle's efficiency.

These innovations could potentially reduce or completely
As the vehicular risks are reduced, the insurance premiums
decline. The flow of EV-specific data increases, and insurers remove most of the risks enunciated in earlier stages. This
will considerably reduce the cost of EVs, their risks, and the
can understand the risks associated with every type of EV
corresponding insurance premium. The surge in data flow
and individual component. The risk modeling and
enables insurers to enhance their risk models with greater
assessment are done at a granular level. This helps insurers
design standalone EV-specific policies that are not influenced precision, incorporating real-time into usage-based
by the legacy of ICEVs. This phase is characterized by the insurance. As EVs incorporate more advanced driver
introduction of niche covers such as for battery or motor assistance systems and artificial intelligence, the interaction
type, battery swapping, and battery degradation. The behavior between humans and machines becomes one of
wealth of available risk data empowers insurers to enhance the key factors for risk assessment and pricing. As the insurer
their usage-based insurance offerings. This includes the and OEM relationships mature, embedded insurance could
development of novel usage-based insurance solutions that be extensively leveraged for creating seamless purchase and
service experiences.
incorporate EV-specific factors such as battery usage
patterns, battery degradation information, driver behavior,
and the driving environment. The Road Ahead
The future of transport is EV, and we are currently in the
A potential disentanglement of EVs from OEMs could happen process of transitioning towards it. However, the shift from
due to their wide proliferation. The inability of OEMs to fossil fuels will not be easy due to the maturity levels of ICEVs
expand their service networks to cater to the mass market and the superior user comfort they provide. EVs are
or due to regulatory intervention may result in the currently in the nascent stages of change, and the auto
proliferation of authorized and decentralized repair insurance industry is beginning to respond to the change.
networks that follow the guidelines defined by the OEMs. After finding success with early adopters, the existing
This will considerably reduce the repair costs and the technological challenges in EVs could become potential
associated insurance premiums. This disentanglement may roadblocks for crossing the chasm and finding mainstream
also create third-party data aggregators and data platforms buyers. The changes are dynamic, and hence, insurers will
for wider market collaboration and insights. have to closely monitor their progress. They will have to
work with OEMs, individual component manufacturers,
Taking flight software providers, and service networks to understand the

The third stage is characterized by the mass adoption of EVs nuances and design appropriate basic coverages, additional
even by the late majority in the technology adoption life cycle coverages, and endorsements.
and the emergence of several models. It could be a time in
the future when many of the current research activities start References
showing positive results. For example, redesigned battery Various Sources.

32 July 2024 The Insurance Times