How insurance products change as electric cars become more popular?

​Now in its second edition in 2023, the "Move to the future" study, carried out by EY in collaboration with the Italian Insurtech Association, aims to investigate the evolution of the mobility market in Italy and the insurance offer. The challenges of sustainable mobility and the spread of electric cars to insurance companies are analyzed, as well as the opportunities arising from an increasing diffusion of these vehicles.

The study consists of a qualitative survey involving players representing more than 50 percent of the Italian motor liability market, relevant brokers active in the motor products business, and major roadside assistance players. Specifically, according to an EY survey on the mobility of the future, about 45% of Italians plan to buy an electric vehicle in the next few years and more than 65% of the car range offered by vehicle manufacturers will be electric by 2026. The decline in registrations for traditional fuels found at the close of the year was countered by an increased uptake of electric, with a 128% growth over 2020, which placed Italy fifth in Europe in terms of number of registrations.

The significance assumed by the e-mobility market in recent years has led Insurance Companies to adapt with new products specifically for electric vehicles and/or by adapting and extending the coverage offered for traditional internal combustion vehicles. Currently, 71% of the Companies surveyed include specific products dedicated to electric mobility in their offerings. In addition, a further 23%, recognizing its potential, say they are considering its introduction.

The products currently offered by the largest number of Companies are those dedicated to micro-mobility, offered by 76% of respondents, reflecting the strengthening presence of these vehicles on Italian roads. In second place are insurance products dedicated to rental (59%), precisely because the shift from ownership to usership, one of the hottest topics of the moment, is growing. This is followed by behavioral coverage, in which the premium is modeled on the customer's driving habits (47%) and embedded policies, integrated with the purchase of the vehicle (41%). Enjoying less success, however, are pay-per-mile policies (35%) and products related to multimodal mobility (29%). Multimodal transportation simply refers to the way people travel by multiple modes of transportation. In addition to one's car, there is the bicycle, scooter, bus, or subway.

Looking to the future, the picture changes considerably. Dedicated multimodal mobility products (indicated by 71% of respondents), based on the idea of moving from single vehicle coverage to coverage of the individual in all his or her travels, as well as embedded policies (71%), offered through partnerships with major auto makers, will seem to dominate. While products dedicated to micro-mobility will continue to enjoy good success according to 35% of respondents, less luck will be had by products dedicated to rental, pay-per-mile policies, and behavioral coverage, indicated by only 29% of Companies. In particular, so-called "behavior-based" or driving behavior-based policies are considered less relevant than in the past and difficult to integrate with current models

Thus, a substantial mismatch emerges from the survey between the products seen as most promising for the future of the market, and those currently included in the surveyed Companies' offerings.

Most respondents (76%) said that micro-mobility-related products are already part of their offerings. Specifically, 29% of the Companies offer customers specific and exclusive covers for scooters and electric bikes, while 47% propose an extension of the covers already in place pandering to the demand of the customer experiencing more urban mobility. To understand the growing interest in micro-mobility coverage, one needs to know that insurance companies are protecting their customers by following them in all their mobility-related needs, untying themselves from the concept of coverage directed only toward the specific vehicle. In fact, today the industry is moving toward a new approach geared toward the concept of multimodal mobility, that is, a new way of getting around that contemplates a strong rationalization of the use of the private car, in favor of the multiplicity of available means of transportation: bicycle, scooter, scooter, public transportation, and so on. From the insurance point of view, this presupposes a complete transformation of the model of offering simple RCA towards a 360° coverage of the customer's movements, and thus focused on the individual rather than on the single vehicle.

The new challenge for the Companies is to integrate in a single subscription a policy that covers all the means used, thus shifting the focus from the "license plate of the vehicle," to the person who is followed in all his movements with the means. The introduction of multimodal insurance aims to simplify and make insurance more affordable for people who use different means of transportation while promoting sustainable urban mobility.

The gradual spread of electric has opened up a number of opportunities for Companies related to the possibility of offering new products and services, as well as covering new markets and reaching different segments. 71% of respondents see the propagation of e-mobility as the main opportunity to offer coverage related to new risks, primarily cyber. Electric vehicles, in fact, are more complex and advanced from a technological point of view than internal combustion cars, mainly due to the presence of drive management software and systems dedicated to charging and services offered to the driving user. This technological complexity opens the way to the possibility of hacker attacks with the goal of taking control of the individual vehicle, or sending charging and road systems into disarray. In this sense, the Companies can intervene by offering the user the possibility of protecting themselves from this risk.

In addition to being more technologically advanced, electric vehicles are made up of specific components that are particularly expensive, first and foremost the battery. In fact, the batteries generally used in this type of car are lithium batteries, which have the advantage of being light, compact and recharge quickly, but for these very reasons they turn out to be very expensive. This characteristic generates in users the desire to protect themselves, creating the opportunity for 76% of Companies to offer policies that cover the possible theft, fire or damage of this component.​