Straight talking from the Editor’s keyboard, as Al Walker offers a personal view of the legal action being taken by MOL and Allianz against VW-Audi-Porsche.
Got a sinking feeling when you just wrote paper on a cargo full of electric vehicles recently?
Hmmm, understandable after high profile events like the Luton airport fire and the loss of the Felicity Ace cargo vessel, which was reportedly chock full of brand new hybrid and battery powered cars. Just under 4000 vehicles were lost in a fire which could not be controlled and forced the 22 crew to abandon ship. After smoking away for two weeks, the Felicity Ace sank, which at least spares the expense of a forensic investigation into what many insurance claims specialists know: Lithium batteries which combust in enclosed spaces tend to generate intense heat, which then melts just about everything around it.
The legal case pursued by Allianz and Mitsui OSK lines will rumble on for some years most likley. But the immediate issue for any insurer engaged in underwriting cargo ships, containers, or storage facilities for damaged EVs is pressing, for three primary reasons.
First, the battery fire risk is exponentially increasing, year on year. The EU, US and many other arms of the world government have all agreed that production of internal combustion engines needs to stop around 2030-35. That means more damaged battery cars every year, plus millions more new EVs being shipped and stored for consumption. On top of that commercial vehicles like delivery vans, shuttle buses, lorries and buses will have to be stored overnight somewhere, to prevent theft or vandalism – again an inevitable risk of fire in enclosed spaces. The UK has a vehicle parc of around 40 milion right now, imagine the storage and charging problems if just half of that parc is pure battery.
Secondly, land in the UK is expensive and more storage for damaged EVs and hybrids cannot be acquired cheaply. That will lead to new solutions being tried in future to process vehicle claims, or write-off the EVs and dismantle them and safely retrieve the battery for its salvage value. In some respects this is an entirely new industrial recycling sector which will replace the existing scrap network. But it’s obvious that it will need at least three times the physical space – will politicians stop housebuilding or planting trees instead of food crops to turn over land for battery recycling? Tough decisions ahead for whichever party has to enable that globalist policy by 2040.
CLAIMS INFLATION WILL GO HIGHER
Thirdly, most important of all, insurers need to separate the true risks from the battery car hype. EVs may tick an ESG box on an annual report, but they consume vast amounts of resources in their construction, sale (ore more commonly rental via lease deals), then repair and scrappage. Claims costs can only head one way in the future, in every part of the insured EV chain; manufacture, distribution, sales, consumer usage and battery recovery for scrap value. How can AI predict those exponential costs accurately, when so much of this tech is still evolving? Add on semi-automated driving systems, which may cause more serious accidents, plus factory recalls, before being perfected and you have a recipe for motor book losses on a Cazoo scale.
Let’s assume that every claim involving an automated system which allegedly malfunctioned just before impact, requires an in investigation into driver actions, missed recalls and service work, legal arguments over software bugs not updated, app systems not installing properly and more. You get the picture. When there are 2 or 3 PI claims surrounding the typical two car incident the bill just got 10 times bigger as the law firms get busy for years, not months.
THE GRASS ISN’T ALWAYS GREENER
In the rush to ration personal freedom, car journeys, or travel in general, globalist politicians and activists will regard the financial impact associated with EVs as a price worth paying, since the new religion of greenwashing demands blind faith in battery vehicles being intrinsically “good” for the planet. But other religions may yet win the battle for hearts and minds, demanding freedom to drive wherever and whenever they wish. Insurers need to be wary of picking up the tab for a mass transport experiment which may prove to be as unsuccessful as the battery cars of the early 1900s. Literally a flash in the pan.
For now insurers would be wise to start pricing EV premiums higher and explain to the public exactly why these tech-packed vehicles cost so much to repair, or write-off. Mollycoddling people by pretending that cheap EV car insurance can ever be a relaity for the average person on 28K a year salary is simply delaying the inevitable collapse of a house of cards.
Interesting times ahead.
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