Although electric vehicles make up only 2% of the Australian passenger fleet, Taylor Fry actuary Tom Moulder says they present a “massive opportunity” for insurers.

Sales of EVs jumped to 21% of overall vehicle purchases last quarter.  Many Australian states expect that figure to rise to half by 2030, Mr Moulder told the Insurance News Beyond the Buzzwords conference.

“EVs are a massive opportunity for insurers, this is a huge market transition. Not a lot of things like this happen, so it's a big opportunity to grab business,” he said.

Taylor Fry calculates there is potential for higher claim severity due to total loss exposure from batteries, which represent 30%-50% of an EV’s value and are difficult to repair.

Its analysis found insurers charge 3%-20% higher premiums for EVs.

“Reasonably minor accidents can result in very expensive repairs or even write-offs. That’s sort of tough for insurers to address on their own, but some manufacturers are starting to develop factories that make that process a little bit easier, a little bit more modular,” Mr Moulder said.

“Risk at a really granular level will be hugely important – informed pricing based on monitoring of risk will be massive, and ensuring [insurance] products capture the requirements of EVs.

“We’re seeing products in the market now cover things like charging cables and wall chargers, or even just marketed towards EV owners ... but not as much as there is overseas. Closely monitoring claim frequency as EV uptake increases will drive opportunities to select good risks.”

Speaking at a conference masterclass session, Tesla insurance business manager Paul Sofronoff said the EV maker has invested in training for external repairers, particularly around battery safety.

And he said damage to batteries is less common than many people predicted, because they are located at the bottom of the car where it is “reasonably well protected”.

“We wanted to lower the total cost of ownership of the Tesla and felt we could do that by reducing the cost of repairs, and therefore impact premiums directly,” Mr Sofronoff said.

“Delivering lower repair costs hopefully impacts insurers to reduce their premiums.”