EV fire incidents 'not a concern', insurers unlikely to hike premiums

Despite rising incidents of two-wheeler electric vehicles (EVs) catching fire, general insurance companies are not planning to increase premiums immediately as claims are still in single digits. The insurers said they will keep a watch and hoped manufacturers will improve the quality of vehicles.

The vehicle owner will be eligible for claims from an insurance company in the event of a two-wheeler EV catching fire, only if he/she has a comprehensive motor insurance policy, which includes an own damage and a third party cover. If one has only a third party insurance cover, then insurance companies will not cover the damage to the vehicle because third party insurance covers losses to the third party, not to the vehicle owner.

“When we look at the overall portfolio, if you have underwritten some of the better EV manufacturers, you won’t see too many claims. In our entire portfolio — we have almost 25 per cent of the two-wheeler EV market share — we have seen single-digit claims. So as of now, we do not see a need to increase the pricing because this is within our appetite for losses. But if the numbers become much larger, we have to look at it,” said Bhargav Dasgupta, MD & CEO, ICICI Lombard General Insurance.

“Having said that, the manufacturers and the government have taken cognizance of the developments and I am sure they are working on improving the quality of the vehicles. So, I would not get too worried about a few incidents because for the longer term perspective, EV is the way to go and we are certain that these are initial teething problems and manufacturers will improve the quality to address this issue. So, we are not looking at changing pricing as of now,” Dasgupta said.

After a number of incidents of two-wheeler EVs catching fire in the past few weeks, the government directed EV makers to immediately recall faulty batches that may trigger more such incidents. Ola Electric’s Chief Executive Officer Bhavish Aggarwal has reportedly said there may be more electric scooters catching fire, but such incidents will be rare, Reuters reported.

The company is said to have recalled more than 1,400 e-scooters and appointed external experts to investigate the cause of the fire in their e-scooters.

“Currently, two-wheeler EVs are less than 1 per cent of the portfolio. The insurance companies are still trying to understand the risks associated with the segment. These incidents will not result in a premium increase, at least from our side. Having said that, this segment is likely to grow and we are keeping a watch on such incidents and looking at the risks emanating from these segments,” said Rakesh Jain, ED & CEO, Reliance General Insurance.

“We are not going to increase premiums immediately because of the incidents. However, it is a matter of concern but we cannot have a knee-jerk reaction to it,” said the chief executive officer (CEO) of a private sector general insurance company.