The advent of electric vehicles (EVs) and other new-age mobility services presents both opportunities and challenges for insurance providers. As the market embraces technologies like e-mobility, autonomous driving, and connectivity, insurers must adapt their product offerings and business practices to capitalize on these emerging trends.
Studies suggest that the shift to EVs will lead to a decrease in claim frequency due to their reduced maintenance needs. However, the severity of claims may increase due to the high cost of replacing components like sensors and batteries. Additionally, the growing popularity of fleet businesses and micro-mobility could reduce the traditional car insurance market for insurers.
Despite the potential benefits of EVs, there are also emerging risks that insurers must consider. Software breakdowns, for instance, could create new liability issues. The scarcity of spare parts and the lack of benchmark data for pricing could also lead to higher insurance premiums.
Research indicates that EVs are involved in more traffic accidents than conventional vehicles due to driver skill deficiencies, particularly related to rapid acceleration and quiet operation. Battery theft is another potential concern as EVs become more prevalent.
Insurers will need to develop innovative approaches to address the decline in car insurance premiums and explore new business models to compensate for this loss. They can draw inspiration from pricing models in other jurisdictions and collaborate with industry experts to develop packages tailored to the specific needs of the Kenyan market.