UK insurance industry suggests electric replacements for written-off cars

The industry association wants insurers to "enable" customers to make "more sustainable" choices.

Hyundai Kona Electric charging

James Fossdyke

By: James Fossdyke

Jul 19, 2021 at 5:40am ET

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British car insurers could soon “help” drivers who have had their car written off switch to an electric vehicle, according to new proposals. According to the Association of British Insurers (ABI), the industry wants to encourage drivers to make “more sustainable choices”, which could include going electric after a car is written off.

The news comes as the ABI unveils its “ambitious climate change roadmap” for insurance firms, through which it hopes to “decarbonise” the industry by 2050. The plan, which the ABI calls the “most demanding and far-reaching carbon reduction plan” of any similar sector in the world, doesn’t just cover car insurance, but also includes pensions and other forms of insurance.

As well as decarbonising the industry by 2050, the ABI wants insurance and long-term savings firms to invest a combined total of almost £1 trillion in green infrastructure. However, the organisation says this figure is dependent on “significant regulatory and market reform”, requiring regulators and government to change the rules.

Car insurance claim forms

For car insurance customers, the ABI says it wants insurance firms to make more eco-friendly choices when making claims. The organisation wants to work with other sectors to find out how this could work, but it has already suggested schemes that would “enable” customers to switch to an electric vehicle (EV) after their car is written off.

The association also wants insurers to “encourage the development of a sustainable secondary market for electric vehicles”. And the ABI says there should be “consistent practice” that allows for the reuse and recycling of electric car charging equipment.

2020 Nissan LEAF

“We all know the environmental crisis is the greatest threat facing our planet and all sectors need to challenge themselves like never before,” said ABI director-general Huw Evans. “We accept that our sector’s emissions are amongst the most of any industry in the economy but, conversely, this means we are uniquely placed to drive the transition including through huge investment potential in the green economy and our reach to millions of customers.

“Trade associations like the ABI have a critical role to play in enabling leading firms to work together to tackle this unprecedented challenge. I’m proud of the tireless effort from the ABI and its members to develop this roadmap which will help all insurance and long-term savings companies understand what they need to do to help us meet net-zero targets. The roadmap will ensure we take decisive steps so that our sector is a big part of the solution, not the problem.”

More on changes in the insurance industry:

Government expects whiplash reforms to save motorists £1.2bn

UK: New rules aim to stop insurance 'loyalty penalties' for drivers

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And UK energy and climate change minister Anne-Marie Trevelyan said the ABI’s roadmap, combined with government policies, would be “critical” to tackling climate change.

“We are at a pivotal moment for our planet, and the Association for British Insurers is showing how protecting the environment and supporting economic growth go hand in hand,” she said. “Today’s ambitious plan for the insurance and savings sector, including the potential to invest nearly £1 trillion to help the UK reach net zero carbon emissions by 2050, will be critical alongside actions by this government and the public to tackle climate change.”

Top view of approved vehicle insurance policy with car key and car toy on wooden desk

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