By: Thabo Manamela - Head: Quality and Knowledge Management at Santam

While South Africa’s electric vehicle market (EV) is still in its infancy, the sector has been in the spotlight recently with Eskom’s release of EVs into their fleet as well as the signing of a Memorandum of Collaboration (MoC) between the state utility and Chinese EV maker BYD, all last month. 

Broadly, EVs are experiencing ongoing growth in response to increasing environmental awareness, rising fuel costs, and global automotive trends. At Santam, South Africa’s largest short-term insurer, we have noted the rise of EV adoption as an emerging risk factor for the industry as it relates to insurance coverage and underwriting. 

Local EV sales increased by 35% between 2023 and 2024. And with agreements like the recent one between BYD and Eskom, this number is set to increase as South Africans look for a better driving experience, lower running costs, and decreased environmental impacts. Santam is keeping a close eye on the unique risks that EVs present. We are also working to ensure the risks are accurately reflected in our underwriting and pricing of EVs, particularly the availability of repair parts through global supply chains as this technology is still relatively new to the local market.

At present, there is no difference in insuring an EV or Hybrid versus a petrol and diesel vehicles. While EVs are generally regarded as lower risk in comparison to petrol and diesel vehicles, it is too early to predict whether insurance will be priced differently from petrol and diesel vehicles due to the unavailability of claims data to make decisions.

That said, the availability of parts and repairs will likely be one of the challenges insurers will face. EVs will require highly specialised handling after an accident. Correct towing process, safe management of battery systems, and sticking to manufacturer protocols are essential to avoid further damage and to preserve warranties. 

The absence of enough qualified towing and motor body repairers in certain regions of the country will pose a challenge for customer service. 

Collaboration with industry stakeholders, including vehicle manufacturers, to build knowledge and understanding of EV features is therefore crucial at this stage. Santam recently hosted a Masterclass in partnership with uYilo, South Africa’s national e-mobility initiative, and Nelson Mandela University (NMU) to share knowledge and create awareness around EVs for Santam staff members and brokers.

The training of staff members, particularly those involved at claims stage, is crucial to ensure fair handling of EV versus petrol and diesel vehicle claims. Motor body repairers also require support to ensure that they are ready to handle EVs and Hybrids. Motor manufacturers' protocol adherence also requires collaboration to ensure that the repair process meets the prescribed quality standards, safety is not compromised, and vehicle warranties are not invalidated by poor workmanship. 

Despite these nuanced and evolving risks, EV insurance will not necessarily be more expensive for all consumers. Every risk, including a vehicle, is priced differently when it comes to premiums. Aside from costs of repairs and parts, calculating of premiums is based on a myriad of aspects such as make and model of the car as well as the risk profile of the customer. 

The rise of EVs signals an exciting shift for the South African automotive industry, insurers, and vehicle owners. Partnering with an insurer that invests in innovation and improving the technical skills of its workforce will ensure customers are well served and safety is not compromised due to poor understanding of a rapidly evolving EV market.