Electric Vehicle Insurance Market Poised for Explosive Growth
New Delhi, June 22, 2023 – The global electric vehicle (EV) insurance market is booming, fueled by the rising popularity of EVs, government support for electric mobility, and growing environmental awareness. A recent study by BlueWeave Consulting projects substantial growth in this sector, estimating the market size at USD 38.93 billion in 2022 and forecasting a value of USD 401.59 billion by 2029. This represents a remarkable compound annual growth rate (CAGR) of 39.68% between 2023 and 2029.
The surge in EV adoption worldwide has directly increased the demand for insurance products tailored to these vehicles. Stringent emission regulations and eco-consciousness are further accelerating the shift to emission-free EVs, thereby boosting the need for specialized insurance. Customers are also becoming more aware of the advantages of EV insurance, such as comprehensive coverage and customizable plans, leading to greater demand. Insurers are attracting customers by offering benefits like free charging, battery replacement, and reduced premiums for safe driving, which also increases EV insurance adoption.
Opportunity: The Expanding EV Market
As people become more conscious of the environmental consequences of traditional gasoline-powered vehicles, they are increasingly turning to electric vehicles as a more sustainable choice. This inclination towards electric vehicles has fueled the demand for EV insurance, which offers coverage for the unique risks associated with owning and operating such vehicles. Companies like AXA and Zurich Insurance Group have recognized the developing demand for EV insurance and have created products specifically for electric vehicle owners.
In addition to insurance providers, governmental bodies also recognize the importance of promoting electric vehicle use. The California Air Resources Board (CARB), for example, has instituted a Zero Emission Vehicle (ZEV) program requiring automakers to manufacture a certain percentage of zero-emission vehicles annually. This initiative has accelerated the adoption of electric vehicles in California, also contributing to the expansion of the EV insurance market.
Overall, the rise in environmental awareness and in the need to decrease carbon emissions is spurring the growth of the EV insurance market. As more consumers switch to electric vehicles, the demand for EV insurance is predicted to continue to rise.
Impact of COVID-19 on the EV Insurance Market
The COVID-19 pandemic significantly impacted the global EV insurance market. Initially, the market experienced a slowdown because of disruptions in the automotive industry’s supply chain and a decline in vehicle sales. However, the pandemic also led to an increase in demand for personal transport, which accelerated the adoption of EVs and EV insurance. Furthermore, the pandemic has raised awareness of the significance of health and safety, leading to an increase in demand for insurance coverages, such as accidental damage and liability coverage. The pandemic has also intensified the trend of digitization and the use of technology in the insurance industry. Companies have increasingly adopted digital platforms and processes to enable remote work and contactless transactions. Additionally, the pandemic has intensified the focus on providing customized and value-added insurance solutions to customers, including usage-based insurance (UBI) and telematics-based insurance.
Global Electric Vehicle (EV) Insurance Market – By Coverage Type
Based on the coverage type, the global electric vehicle insurance market is segmented into accidental damage, theft or malicious damage, and car battery & auto parts replacement. The accidental damage segment is the major contributor to the global electric vehicle (EV) insurance market. This coverage is considered an essential part of standard insurance policies offered by leading players. The demand for accidental damage coverage is rising due to increasing traffic congestion and road crashes, making it a highly in-demand insurance coverage among drivers. This trend is expected to continue to fuel the segment’s growth.
The car battery and auto parts replacement segment is predicted to experience the fastest growth rate over the forecast period. The car battery is one of the most expensive parts of an EV, and the cost of replacing it is significantly high. Therefore, many EV owners prefer insurance plans that cover car battery replacement, with most standard insurance coverage plans designed for electric vehicles including car battery replacement as an insurance benefit. These factors are likely to boost the growth of this segment.
For example, Allstate Insurance Company offers coverage options for electric and hybrid vehicles that offer coverage for various damages, including accidental damage and battery replacement. Similarly, Liberty Mutual provides coverage for EVs, which includes battery and electric motor coverage, in addition to other standard coverage options like collision, liability, and comprehensive coverage.
Competitive Landscape
The global electric vehicle (EV) insurance market is fragmented, with numerous players serving the market. Key players include Allianz SE, AXA SA, Berkshire Hathaway Inc., Chubb Limited, Munich Reinsurance Company, Zurich Insurance Group Ltd., The Travelers Companies, Inc., Liberty Mutual Group Inc., Assicurazioni Generali S.p.A., MAPFRE S.A., American International Group, Inc. (AIG), Aviva plc, China Pacific Insurance (Group) Co., Ltd., Ping An Insurance (Group) Company of China, Ltd., and Sompo Holdings, Inc. These companies are adopting strategies such as facility expansion, product diversification, strategic alliances, collaborations, partnerships, and acquisitions to increase their customer reach and gain a competitive edge in the market.
