By Derco Rosal
Feb 19, 2025
Electric vehicle (EV) owners planning to avail of auto insurance can expect more expensive premiums, as guide rates will be published by midyear or earlier, according to a senior official of the Philippine Insurers and Reinsurers Association (PIRA).
The draft of the guide rates for EV insurance has already been submitted to the Insurance Commission (IC), and its publication is expected “before the middle of the year,” PIRA executive director and trustee Michael Rellosa told reporters on the sidelines of the overseas seminar of the Insurance School of Japan (ISJ) on Tuesday, Feb. 18.
Rellosa said the non-life insurance industry group comes up with the rates and submits them to the IC for assessment and approval. The IC is the government regulatory authority overseeing the insurance, pre-need, and health maintenance organization (HMO) sectors.
As of now, Rellosa noted that the industry is still working on the updates for EVs.
“We have asked for assistance from countries that have already covered electric vehicles like Malaysia, Thailand. But of course, we can’t rely on their statistics because their data is different from ours. So we’re trying to marry the two and come up with guide rates going forward,” he said.
In general, premium rates are “significantly higher for electric vehicles,” according to Alexander Reyes, a member of PIRA's motor committee.
“Companies are still trying to feel their way. Some companies actually opted not to insure electric vehicles first because they heard that the losses are bad in other markets. But some companies are trying, maybe trying with a few accounts,” Reyes further said.
Additionally, Rellosa noted several problems that PIRA faces with EVs, foremost of which is the cost of the vehicle itself.
“If an electric vehicle has an accident and the battery runs out, that’s already one-third of the value of the vehicle. One-third to one-half,” he said, stressing that the association has identified “a lot of issues that are unique to electric vehicles."
Beyond that, he also noted that the quiet operation of EVs raises safety concerns, while batteries placed underneath are vulnerable to road damage and flooding, among other risks.
With EVs being high-risk, Reyes said rates for electric cars are significantly higher, possibly double than those of regular cars and other vehicles.
When compared to local market rates, this double-the-regular-vehicle rate was described by Reyes as “too low.”
Relative to regular vehicles, there are fewer insurance companies covering EVs, Reyes noted. As such, insurers charge higher rates to policyholders or clients due to the low competition.
Source: mb.com.ph
Your article entitled " EV Insurance Premiums in Philippines could double compared to traditional cars" published at the Manila Bulletin Feb. 19, 2025
Hi Derco,
We write in reference to the captioned article, which you pened. We just wish to bring to your attention a simple correction that needs to be made to ensure the accuracy of what was reported.
As stated in paragraph two of your article we wish to clarify that it was not the draft of the guide rates for EV insurance that was already submitted to the Insurance Commission. The Draft is still a work in progress by PIRA's Motor Technical Committee. What was submitted to the IC is the draft of the proposed insurance premium rates for the new Motorcycle Taxi Passenger's Personal Accident coverage. These are two distinct coverages.
We would appreciate a correction at the earliest and most convenient opportunity.
Should you have any questions, please do not hesitate to contact me.
Thank you and warm regards,
Mitch
Michael F. Rellosa
Executive Director
Electric cars may demand higher insurance costs vs traditional vehicles — PIRA
Aaron Michael C. Sy
February 19, 2025
Insuring electric vehicles (EVs) could cost twice as much as the premiums for traditional vehicles that use gas or diesel, the Philippine Insurance and Reinsurance Association (PIRA) said.
“Maybe double. Maybe that would be the top end. But definitely higher [than regular vehicles]. It depends on the company. It’s hard to say because I don’t know what their commission rates are, but it’s significantly more expensive,” PIRA Motor Committee Member Alexander Reyes told reporters on Tuesday.
PIRA Executive Director Michael L. Rellosa said they hope to have guide premium rates for EVs by midyear, adding that the group has collated data from other countries to help determine these benchmarks.
“We have asked assistance from countries that have already covered electric vehicles like Malaysia and Thailand. But of course, we can’t rely on their statistics because their data is different from ours. So, we’re trying to marry the two and come up with guide rates going forward,” he said.
EVs will likely need higher premiums as these are considered riskier, Mr. Rellosa said.
“If an electronic vehicle has an accident and the battery runs out, that’s already one-third to one-half of the value of the vehicle. And then, of course, electric vehicles are heavier and they’re quieter… It’s too quiet so it causes accidents. Another thing, being electric, the batteries are actually underneath the car — and we know the condition of roads,” he said.
“If water gets into the batteries and short-circuits, it’s a problem. Another problem, although the automotive industry is already looking into it, is lithium batteries, because some of the earlier versions of EVs actually burst into flames on their own. So, it becomes a risk, not only for the motor vehicle, but even for the houses or the buildings that they’re parked in. We really have a lot of issues that are unique to electric vehicles.”
Mr. Reyes added that there is a need to account for climate risks when insuring EVs and coming up with policy terms and conditions, as weather phenomena could result in big losses for insurers.
“What I’ve heard is in other markets, if you go through a flood, for example, it’s not covered… Those are the things that insurance companies may resort to. If your concern is that the battery might get damaged or the electronics might get flooded, you will set conditions where it’s not allowed. In a normal policy, you don’t put that. If the water level is low, you will be fined. If it’s an EV, the terms will be stricter,” he said.
Companies may also have to change the way they insure as EVs have a different value depreciation rate compared to regular vehicles, Mr. Reyes said.
“Now, for us, the basis of the premium you pay is a rate applied to the fair market value of the vehicle. If the fair market value of the vehicle goes down faster, the insurer might need to change its basis for the rate. It might need to develop rates independent of the fair market value.”
Meanwhile, Mr. Rellosa said the PIRA has submitted the guide rates for motorcycle taxi passengers’ personal accident coverage to the Insurance Commission (IC) for approval.
The nonlife insurance industry’s net premiums written grew by 10.49% year on year to P71.84 billion in 2024 driven by the motor car business, latest IC data showed. Premiums earned went up by 6.58% year on year to P67.79 billion, while gross premiums written climbed by 9.62% to P134.12 billion.
Meanwhile, the sector’s combined net income inched down by 2.63% to P8.89 billion last year.
Source: bworldonline.com
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