Fixing EVs is expensive, leading many to declare these as a loss.

Car insurers in the Asia-Pacific region are under pressure to raise premiums due to rising costs from more frequent road accidents and expensive car repairs.

In Australia, Japan, and South Korea, they are battling surging claims for expensive repairs involving high-tech cars and unavailable auto parts, Laurel Hu, head of casualty underwriting for the region at Swiss Re Ltd., told Insurance Asia.

“Emerging markets like India, Indonesia, and Vietnam are experiencing a surge in claims due to higher accident frequency, urban congestion, and inadequate repair infrastructure,” she said in an emailed reply to questions.

Pricing is a key battleground for motor insurers in a competitive market with low but steady profits, Swiss Re earlier said in a report.

Whilst car insurance makes up 40% of the $2.2t global property and casualty insurance market, insurers could only break even, according to S&P Global Mobility.

Tight regulation makes it difficult for insurers to raise premiums, GlobalData said in a separate report.

More travel and car usage amid an economic recovery are increasing the likelihood of road accidents.

“Distracted driving and increased road speeds, particularly in the post-pandemic context, are leading to more severe accidents,” Hu said. Insurance claims are likely to remain high if roads are not upgraded or safe technologies are not adopted, he added.

Angat Sandhu, a partner at McKinsey & Co., said rising claims are also affected by unavailable car parts and mechanics across the supply chain.

Electric vehicle (EV) battery repairs are expensive, leading many insurers to declare these as a loss. Repair costs and times also haven’t matched supply, he said.

Still, EVs are expected to spur a 5.6% rise in car insurance sales this year, according to GlobalData.

“Insurers are developing new policies to cover EVs, which come with a new set of risks, as EV sales increased significantly in 2023-2024 and further growth is anticipated in 2025 and beyond,” it said in a report.

State subsidies and carbon reduction policies would further boost EV sales and motor insurance demand, GlobalData said.

Insurers are now weighing whether to build their own fraud detection systems or partner with tech providers to better assess motor insurance claims.

“It is also important to upskill claims assessors,” Sandhu said, citing the need for an industry-wide response.
Enhanced data analytics and stricter claim controls should help, Hu added.