Catch up now: Insure TV Masterclass - ESG Conference
What does climate change mean for insurers and insurance brokers? In this Masterclass with Mark Colegate from Insure TV, our Head of Commercial Lines Underwriting, Mark Dunham provides insights and strategies that can help drive us to a more sustainable future.
Mark was joined by other ESG experts from the insurance industry, including
- Dr Ian Bartholomew, Co-Founder and Chief Underwriting Officer, FloodFlash
- Jonathan Evans, Founder, Sustain Insurance Brokers
Some of the topics discussed in this Masterclass include
- How businesses and households can make sure their properties are more resilient in the face of a flood
- How underwriters can help, or hinder, the development of climate mitigation initiatives
- The advantages and limitations of parametric insurance in combatting climate risks
Want to watch the full panel discussion?
Following on from the ESG Masterclass, Marc Wanless, Head of Motor, Commercial Lines shared his thoughts in this 9 minute video on how rapidly the electric vehicle market is evolving and discusses what impact this has on insurers.
Transcript for video Electric vehicle market with Marc Wanless
MARK COLEGATE: To discuss the development of the electric vehicle market and what it means for insurers and insurance brokers, I’m joined now by Marc Wanless. He is Head of Motor Commercial Lines at Aviva. Marc, so just how rapidly is the EV market evolving?
MARC WANLESS: I think it’s safe to say it’s moving at pace. If you go back to 2020, compared to end of 2022, the number of electric vehicles on the road tripled. And, as an insurer, it means
we’re having to move at pace with that to make sure our customers are happy. We’ve had the government commitment to banning the sale of new petrol and diesel vehicles by the end of 2030. So it means that we’re having to invest time and money as an insurance business to make sure that we’re keeping pace with that change and make sure we stay relevant for our customers.
MARK COLEGATE: And, I suppose, if there’s more cars, there’s got to be more infrastructure that’s coming out as well. So what are some of the issues there?
MARC WANLESS: A lot of it comesdown to the investment. So, if you look at the moment there’s about 42,000 charging points on around the UK network, to support that ban of petrol and diesel vehicles and that transition to electric in 2030, there needs to be at least 300,000 by 2030.
MARK COLEGATE: So it’s evolving pretty rapidly but how revolutionary are the changes then that are going to face you as insurers, insurance brokers and the end client given this backdrop?
MARC WANLESS: I think it’s an interesting one from an insurance perspective, because what we have to remember is that electric vehicle’s essentially a four wheeled vehicle operating on a UK road. So, from an insurance product perspective, the product that is in place today meets the requirements of that vehicle. In terms of, if you look at the way we price risks, most insurers we tend to use that rear view mirror
that the claim to the past tell us what the future is going to be. That claims profile could change. So we’re having to make sure that we constantly review the data we have at our hands at the moment to try and predict the future. We are seeing some of those dynamics change. And it’s not really going to cause us too many issues though, because as I say we’ve still got a human being sitting behind a steering wheel making decisions, and we will still continue to see motor claims occur, and we’ll handle those in the same way that we have done and price in the same way.
MARK COLEGATE: But in a couple of instances, I mean if you get a fire in an electric vehicle, I presume it’s rather different from how you’d handle a fire in a petrol or a diesel car.
MARC WANLESS: Luckily the numbers that we see are really low at the moment. If you look at the research available, it’s a very small number of vehicles. But if a vehicle does catch fire, then it’s a very different type of fire. I think the ignition, with a petrol vehicle you have to have that, something that’s going to ignite that fire; where in an electric vehicle, the number of chemicals, there’s a battery, if that ignites, it can create over a hundred different gases that are coming out of the battery. Some are poisonous to humans. So it comes down to having expertise on hand that can handle those. And I think, for me, in terms of that claims process where we see those fires, it’s, how do we handle those claims. That claims process is broadly similar, but what we have to do is have skilled technicians in play, have some real expertise that they know what they’re doing when they’re coming into contact with battery. They know how to handle the battery in terms of storage,in terms of repairing it. It brings a different
level of expertise.
MARK COLEGATE: And what about the underwriting knowledge, because again presumably underwriting something like a petrol station is very different from underwriting somebody who says I’ve got a whole load of charging points?
MARC WANLESS: So, if you speak to our property underwriters, the underwriting process is very similar. What it comes down to, the key question for them is how do they manage that risk? So, where are the electric charging points placed, what are they placed up against, how close are they to buildings, to combustible materials. So it’s a very similar process, but it really does come down to a conversation with the broker or the customer in terms of if we can get in at the start of the conversation when those charging stations are being designed, we can pass on some of our knowledge and actually help them design a station which is going to be safe and one that we know we can rely on and we can underwrite.
MARK COLEGATE: And how much is there an international angle on this, because a lot of your clients must have fleets of vehicles that don’t just stay in the UK, they go to Ireland, they go to France, they go to Spain, how important is it to be able to cover them in all of those different jurisdictions?
MARC WANLESS: Yes so many of our customers will travel certainly on to the continent. So, our policy, as I said earlier, it’s still same vehicle operating under the same territories. So the insurance requirements are the same. The vehicle is being used in the same way.The fact that it’s an electric vehicle doesn’t really change that. But the charging infrastructure may change because, even if you look at in the UK, the types of chargers out there, there’s different adaptors for each vehicle, but there is something called Type 2 which has become the standard across Europe, but it varies by vehicle. So that’s something that I think, we’ll work with the manufacturers to make sure that we understand those processes, and we can then inform our customers when it comes to giving them advice on what vehicles they should be transitioning towards.
MARK COLEGATE: And what are you learning in this process.This sort of move to EVs, not least because you as Aviva are a large corporate, you’ve got some pretty publicly stated aims to try to be net zero by 2040, most people are going for 2050, so what have you learnt yourselves that you can apply to this market?
MARC WANLESS: I mean with that commitment to be net zero, we’ve made the commitment with our own fleet of vehicles that by 2025 it will either be completely electric or plug in hybrid. So we’ve seen that process, all of our drivers sign up to that. And actually the performance of them is very similar
to what we’d expect. I think for me it does just come down to that risk management process again. It’s, the one thing I think we tend to underestimate is the familiarisation with the vehicle. When you’re given the keys for a new vehicle to a driver, in the past the vehicle they’ve inherited would be the same sort of performance as one they had before. Where the dynamics of an electric vehicle, the acceleration is very different, the braking is different. So we’ve got to make sure from a risk management perspective that we are giving training on how to use that vehicle.
MARK COLEGATE: And how serious a player are you in the EV market today, how serious would you like to be seen, say, in three, four, five years’ time?
MARC WANLESS: It’s a good question. So at the moment our market share across personal lines and commercial is between 10 and 12%. By 2030 we want to be the number one insurer of electric vehicles. So we feel that we need to have a market share of about 14% to get to that number one position. And I think certainly from a commercial perspective, I think in the market today there is a perception that Aviva aren’t entirely comfortable with electric vehicles. Nothing can be further than the truth. Our underwriting appetite is there to add electric vehicles. We cover a large number already. If you look at some of our key commercial customers, they’re transitioning at a rate of a thousand vehicles a year into electric. Our policies are set up. Our underwriting processes are set up for that already. We’ve invested heavily in our claims model.
So we own our own repair network, Solus. They’ve been upskilling all of their technicians over the last couple of years. So they’ve made sure they’ve got a skilled technician every repair shop. So I think we’re well placed already in that electric market. So we have a state of ambition to be number one.
MARK COLEGATE: Aviva’s known as an insurer, but you’ve also got a very big asset management arm to the business. So what are they up to, is it aligned with what your goals are?
MARC WANLESS: Yes they are. If you look recently, there was an investment made of £110m into a business called Connected Kerb. And that’s been set up to install about 190,000 charging points across the UK; some of it across our own real estate. So that’s one really good example of how we’re doing more than selling insurance. This is about how can we invest in the community and the infrastructure to make sure that our customers which are always at the centre of what we do, they’re getting the full access to the full power of Aviva.
MARK COLEGATE: And so finally if brokers want to know more about this rapidly evolving market, how can Aviva help?
MARC WANLESS: So I think there’s a number of ways we can help. We have an electric vehicle hub online. And at the moment it’s driven primarily at personalised customers, but it applies equally to commercial customers. So brokers can access there. They can use, we had a sustainability roadshow on for brokers recently. So that’s available on the Aviva broker website. But also I think the most important thing comes down to people. It’s speaking to underwriters. We’ve got a sales and distributions team. We’ve got our claims team, our risk engineers. They’re all on hand to give advice.
MARK COLEGATE: We have to leave it there. Marc Wanless, thank you for joining us.
MARC WANLESS: Thank you.
** END OF INTERVIEW **
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