Insurers have faced challenges in providing EV drivers with adequate insurance coverage at reasonable prices due to the relatively new and rapidly evolving nature of EV technology. However, insufficient underwriting data and experience have been particular obstacles for them, says Korean Re in a blog posted on its website.
The blog, titled “Review of the Electric Vehicle Insurance Market in Korea”, adds that despite these challenges, the rise of EVs also presents new business opportunities for the insurance industry. In line with supervisory guides, insurers in Korea have developed and released motor insurance riders that allow EV drivers to expand or adjust their car insurance coverage. They include covers for battery replacement, extra repair costs for EVs, and longer-distance towing services in the event of an EV breakdown or malfunction, and risks that may occur while charging EVs such as fire, explosion, and electrocution.
It is important for the insurance industry to develop and establish underwriting expertise in alignment with how the mobility sector evolves.
Battery subscription service
In particular, insurers need to prepare for the government’s plan to introduce a battery subscription service for EVs, which allows double registrations for an EV and its battery pack. In other words, when the battery subscription scheme is implemented, the owner of an EV may be different from the battery pack owner, with carmakers or financial service firms running battery rental services for drivers. As the current law on car registration does not allow two separate registrations for an EV, the government is seeking to revise the relevant law to distinguish the owner of an EV from the owner of its battery.
In response to this change, insurers may have to take a new approach to pricing and providing appropriate motor insurance coverage, with the ownership of an EV being specified and the scope of the insured and coverage being defined more clearly in the insurance policy.