Page 25 - Insurance Times June 2024

Electric

Revolution:

Insurance in the

Era of Electric

Subasree Sampath
Vehicles domain consultant at LTI
Works as an insurance

Mindtree.

The transportation sector stands out as a significant contributor to GHG emissions, prompting
governments worldwide to embark on a concerted effort to move away from fossil fuels by identifying
and harnessing cleaner energy sources. In this pursuit, electric vehicles (EVs) have emerged as a
compelling and environmentally responsible alternative.

Abstract Introduction
The transportation sector is currently undergoing a The transportation sector stands out as a significant
significant shift as electric vehicles (EVs) gradually contributor to GHG emissions, prompting governments
replace conventional fossil fuel-powered internal worldwide to embark on a concerted effort to move away
combustion engine vehicles (ICEVs). EVs are still in their from fossil fuels by identifying and harnessing cleaner energy
early stages of adoption, mainly attracting early sources. In this pursuit, electric vehicles (EVs) have emerged
adopters within the buyer segment. The transition to as a compelling and environmentally responsible alternative.
EVs requires the development of a new infrastructure They offer the advantages of reduced or zero emissions,
for charging, on-road support during usage, and efficient energy utilization, and diminished maintenance
maintenance and repair services. Critical components requirements.
of EVs, including the battery pack, electric motor, The early EVs faced limitations due to their high price point,
charging port, and regenerative braking, are still in the performance concerns, and the nascent state of charging
early phases of development. Consequently, they infrastructure. However, technological advancements, along
introduce new risks that insurance companies must with growing environmental awareness, gradually
cover. These risks are more pronounced during the initial
transformed public perception. Nevertheless, it was the
phases of technological evolution. The risk models are supporting government policies that played a pivotal role
either related to or derived from those established for in catalyzing the industry's growth. Government initiatives
ICEVs. As technology progresses, most of these risks will urging original equipment manufacturers (OEMs) to
be mitigated. As they progress beyond the early stages, transition toward net-zero emissions, coupled with incentives
unique risk models for EVs are set to evolve. The industry provided to the public to embrace EVs, were instrumental
will adapt to new operational models and ecosystems. in driving market adoption.

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