The rise of e-scooters and electric vehicles: What does it mean for the claims industry?

August 30, 2022

Share on LinkedIn Share on Facebook Share on X

By Laura Horrocks, ‪head of fraud data and insight and Chris Frechette, vice president, liability practice

As transportation technology progresses, issues of safety, fraud and liability will need continuous monitoring to match the changing landscape.

Electric scooters (or e-scooters) are now a familiar sight on UK streets but are new enough that safety and legal issues haven’t yet been fleshed out. Similarly, electric vehicles (EVs) use new parts and technology that present unique risks for mechanics, the supply chain, and the claims industry alike. While both e-scooters and EVs are largely embraced as environmentally friendly travel solutions, they’ll create new and urgent challenges in the claims’ realm. For both kinds of vehicles, it’s critical our industry is aware of all the ways in which handling claims could be impacted or changed.

E-scooter popularity

First, we look at e-scooters, a mode of transportation that’s only recently become commonplace and was perpetuated by the COVID-19 pandemic lockdown. As e-scooters become more popular, there are a range of safety issues relevant to liability to consider. Most obvious are the lack of required training to ride one and the physical risks involved. Though most scooters are capped at a maximum speed of 20mph, this isn’t a universal standard, and private models can go significantly faster. Given the lack of engine sound, pedestrians are potentially at risk from being hit if the rider can’t slowdown in time (and conversely, are at a higher risk from being hit themselves). To stop an e-scooter effectively, the rider’s body weight would need to be distributed low and far enough to avoid being thrown forward – something the average person wouldn’t necessarily be aware of. And because e-scooters are two-wheeled and narrow – they allow riders to enter traffic from unexpected places and they can often be obscured by vehicles or objects of greater size.

Additionally, there is currently no legal requirement for the use of a helmet (as casualties resulting in head injury are relatively low), but the risk is nevertheless present. Data tells us these safety concerns aren’t hypothetical – according to the UK Department of Transport, the number of casualties relating to e-scooter use has increased three-fold over the past two years, and fatalities increased from one death in 2020 to nine deaths the following year.

What it means for the claims industry

There are currently UK trials taking place across 31 regions with a variety of private e-scooter companies participating, each adequately insured and approved for public road use. However, there is easy and widespread access to similar vehicles on the private market, none of which have been approved. Consequently, there are unregulated and uninsured vehicles being used in public, further complicating the claims process. Insurers could find themselves handling significant injury claims in addition to the high costs associated with the repair or replacement of a scooter – regardless of whether its use was legitimate.

Lastly, because of the significant risk of injury to the rider and high cost of replacement from lack of availability, fraudulent activity is an increasing concern. And e-scooter theft is sure to rise with demand, so validation of ownership will be key. With UK trials expected to conclude in November 2022 and legislation relating to general use expected in 2023, the groundwork is being laid for a significant increase in e-scooter ownership.

In the U.S., many of the same trends exist in addition to others. Because relatively untraceable single purchase cash cards can be used to rent e-scooters, the renter becomes virtually anonymous, contributing to an alarming rate of vandalism and driving-related offenses that can’t be tracked to the vehicle operator. Additionally, because each state has its own set of laws governing e-scooter use on public roads, there is no uniform set of rules. A minority of states deem them illegal for street use; a handful allow riding on sidewalks while most others don’t; age requirements vary from state to state, and nine states even require a driver’s license to operate an e-scooter. It’s important citizens are educated on which laws apply for safe public use.

The shift from diesel to electric-powered vehicles

In a similar trend, due to increasing fuel costs and environmental concerns, there’s a notable shift in consumers choosing to purchase hybrid or fully electric vehicles rather than diesel-powered ones. Hybrid vehicles were introduced as early as 2010, and electric vehicles have been present in the UK for several years. However, the sale of new EVs outweighed the sale of new diesel vehicles for the first time ever in 2022. This represents a seismic change in the automobile industry that will likely continue to rise as technology progresses.

EV claims will need to be handled differently

Just as it will take time for proper legislation to be structured around e-scooter travel, legal issues will enter unfamiliar territory with new EV technology. Electric vehicle companies’ technological ambitions are like those of diesel-fueled car firms – the eventuality of driverless vehicles. Reports have recently been released suggesting plans to allow self-drive vehicles on UK roads as early as next year.

Improvements in EV technology involve the use of new, expensive, and complex car parts – some of which will come at a premium due to many standard component parts having built-in technology that will need to be reinstated if damaged. This could mean hefty costs for insurers where electric vehicle collisions are concerned.

The obstacle of repair complexity

Logically, repair complexity will increase in line with evolving technology. Repairing EVs presents new safety risks, such as chemical exposure (from leaking electrolytes), electric shock, or fire, as well as unique challenges in the repair process. For example, the battery that powers an electric vehicle is typically embedded in the vehicle’s structure, making it difficult to remove, and when done incorrectly the battery can twist the chassis, incurring additional repair costs. Car mechanics will need to build new skillsets to learn how to fix problems with these parts, and any kink in the repair networks will inevitably worsen the UK’s current vehicle car part shortage and increase supply chain costs. That shortage is expected to contribute to an acute increase in the risk of theft – not for the vehicles themselves but for their parts. Complex components in electric vehicles are valuable, and owners will have to take precautions to prevent theft (particularly since many anti-theft devices can be overridden).

The cost of hiring a replacement vehicle is also likely to increase due to there not yet being general term agreements in place to cover costs. If companies choose to take advantage of this, a drop in EV hire vehicle stock could lead to a much higher-grade vehicle being supplied to the customer, as they’d be entitled to decline a non-electric one.

New solutions, new challenges

In our rapidly evolving world, new and improved technology is integral to solving problems and streamlining processes. The rise of e-scooters and electric vehicles do both and are inarguably beneficial to the planet. It will also lead to unchartered territory in the claims industry – questions, obstacles, complexities – and it’s our job to be prepared to meet the moment and adapt. We’ll continue to monitor emerging trends regarding e-scooters and EVs and keep a close eye on how they impact insurers.

Tags: Casualty, Claims, claims trends, e-scooter, Electric scooters, Electric vehicles, EVs, Fraud, Liability, Liability claims, Property, regulation, Risk, risks, Safety, Supply chain, Technology, transportation, U.S. liability issues, UK, Vehicle, View on property