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Thursday 11 February 2021
Risk and insurance managers have an important part to play in identifying the significant impacts of the array of issues on the sustainability agenda and advising how their organisations could respond. The sustainability agenda is one of utmost importance to many, which is why we will be exploring many of these topics in the coming months; beginning with electric vehicles.
The transition to electric vehicles is a key policy. At Zurich Municipal we are aware of many councils who are moving towards a fully electric vehicle fleet, or who may be trying out vehicles on a ‘test and buy’ basis.
What are the pros and cons?
There are clear environmental benefits of electric vehicles. They will help achieve the national target of carbon net zero by 2050, along with likely lower fuel costs, and reputational benefit.
However, there are increased investment costs in transitioning to an electric fleet, primarily the purchase or lease of vehicles and charging infrastructure, and higher repair charges. Also consider; additional electricity costs, availability of electricity sources, availability of charging infrastructure, vehicle charging times, and the (as yet) limited range of vehicles.
Insurance costs and issues
Electric vehicles and fleets are still in their infancy, so motor insurance costs are likely to increase rather than reduce. Insurers will consider the additional costs of repair or replacement - on average adding £1,000 to accidental damage costs in the event of a claim. There is also additional insurance for batteries and charging points.
If employees take vehicles home, will your organisation install charging points at their home address? Is their home environment suitable, or will a cable have to run out to the vehicle parked on the street? Do you have to consider any third-party liability risks involved, for example, tripping hazards? Also, will there be any implications for the employee’s home insurance?
If vehicles are kept at depots or office sites, do you have a charging infrastructure? Many organisations are adding charging points and building new charging structures, sometimes powered by solar. Are you aware of these new additions across your assets and any implications for your other insurance lines?
The move to electric fleets is a clear and positive development within the sustainability and environmental agendas, which Zurich Municipal supports. However new and different risks need to be managed to ensure your organisation can achieve maximum benefit from these progressive projects.
Below are some questions risk practitioners can ask to get involved in the debate, manage the risks and opportunities, and help decision-making:
Rod Penman (rod.penman@uk.zurich.com) is Head of Public Services and Alix Bedford (alexandra.bedford@uk.zurich.com) is Risk Proposition Manager at Zurich Municipal.
If you have a specific query, why not contact a member of our office team directly? We will be pleased to assist you - whatever your question.