Sharp rise in electric vehicle insurance premiums and unsustainable write-offs: FWD

There has been a sharp rise in electric vehicle (EV) insurance premiums, driven by higher repair costs, labour expenses, and parts shortages — factors that often lead to unsustainable write-offs after minor accidents, according to a recent white paper by FWD Research.

The paper draws on insights from a survey of 250 insurance brokers across the UK and was released shortly after the UK government announced a £1 billion investment in EV infrastructure and introduced new incentives to support EV adoption.

According to the study, the average EV insurance premium now stands at £1,344 — nearly double that of traditional petrol and diesel vehicles.

A lack of a robust parts and repair ecosystem for EVs is inflating costs and often leads insurers to write off vehicles after minor accidents. 90% of brokers surveyed view this practice as economically and environmentally unsustainable.

Developing a sustainable parts market is seen as the most effective way to reduce costs, with 45% of brokers ranking it as a top priority and 84% rating its potential impact as high.

The report also forecasts that by 2035, up to one-third of UK vehicles could be driverless. While advanced driver assistance systems are already reducing accident rates, fully autonomous vehicles raise complex questions around liability and risk assessment.

Uncertainty remains over who should bear liability in accidents involving autonomous vehicles — drivers, manufacturers, or insurers. Notably, 30% of Super Regional brokers believe insurers should assume this responsibility.

As vehicles take on greater driving responsibilities, insurers will need to rethink traditional models to address these challenges, FWD notes.

There is also limited data on EV battery health, which complicates claims and repair decisions and exacerbates environmental concerns around battery disposal.

To address these challenges, FWD calls for collaborative action among insurers, manufacturers, and policymakers. The paper stresses the need to develop a sustainable parts market to lower repair costs and reduce environmental impact through accessible, eco-friendly solutions.

It also urges the establishment of clear liability guidelines to define responsibility in autonomous vehicle accidents.

Julian Green, Research Director at FWD Research, said, “This white paper underscores the urgency of adapting insurance models to keep pace with technological innovation. By taking decisive action today, the industry can reduce costs, minimise environmental impact, and lay the groundwork for a safer, more sustainable future in mobility.”

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