The Rise of EVs Puts Pressure on Insurers

  • Electric vehicles make power figures once reserved for supercars accessible in family cars.
  • EVs are built using modular ‘skateboard platforms’ allowing easy scaling of components and power levels.
  • Automakers can easily add power to electric cars through software updates or different trim levels.
  • Insurers face an escalating profitability challenge due to higher loss costs associated with EVs.
  • EVs have 17% more claims and 34% higher claim severity compared to gas-powered cars.

The rise of electric vehicles is democratizing power, making it accessible to the masses. With modular skateboard platforms, automakers can easily scale components and power levels in EVs. However, this also affects insurance costs as insurers face an escalating profitability challenge due to higher loss costs associated with EVs. LexisNexis data shows that EVs have 17% more claims and 34% higher claim severity compared to gas-powered cars.

Factuality Level: 8
Factuality Justification: The article provides accurate and objective information about the rise of electric vehicles and how they affect insurance companies due to their power capabilities and modular designs. It discusses the differences between EVs and gas-powered cars in terms of power, torque, and insurance costs. The article also includes relevant examples and quotes from industry experts. However, it could have provided more information on the specific impact of these factors on insurance premiums and how insurers are adjusting their policies to account for electric vehicles.
Noise Level: 7
Noise Justification: The article provides a thoughtful analysis of the impact of electric vehicles on insurance companies and discusses the challenges they face due to the ease with which power can be added to EVs. However, it contains some repetitive information and could benefit from more in-depth exploration of the consequences for consumers and society as a whole.
Public Companies: Tesla (TSLA)
Private Companies: Hyundai,LexisNexis
Key People: Xiaohui Lu (Vice President of Global Business Development at LexisNexis)

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Financial Relevance: Yes
Financial Markets Impacted: Insurance companies
Financial Rating Justification: The article discusses the impact of electric vehicles (EVs) on insurance companies due to their higher power figures, increased loss costs, and the need for more expensive repairs. This could lead to changes in insurance premiums for EV owners, affecting the financial markets related to the insurance industry.
Presence Of Extreme Event: No
Nature Of Extreme Event: Other
Impact Rating Of The Extreme Event: Minor
Extreme Rating Justification: There is no extreme event mentioned in the article, and the topic discusses the rise of electric vehicles and its implications on insurance companies.
Move Size: No market move size mentioned.
Sector: Technology
Direction: Up
Magnitude: Medium
Affected Instruments: Stocks

Reported publicly: www.marketwatch.com