What type of study is this?

This is a Modified Delphi Method study (also classified as: Sensitivity Analysis).

September 10, 2025Open Access

Balancing Profitability and Sustainability in Electric Vehicles Insurance: Underwriting Strategies for Affordable and Premium Models

XLXixiang LinMinjiang University FCF. Q. ChenShenzhen Technology University HZHaigang ZhuangYang-En University

Key Points

Premium electric vehicles exhibit lower volatility in underwriting costs due to advanced safety features.
Budget electric vehicles experience higher premium fluctuations because of increased accident risks and repair costs.
A sensitivity analysis revealed potential premium adjustments of up to 14.5% under worst-case scenarios.
Incentive-based pricing strategies can help align underwriting with sustainability commitments while mitigating risks.

Abstract

This study aims to develop an optimal underwriting strategy for affordable (H1 and M1) and premium (L1 and M2) electric vehicles (EVs), balancing financial risk and sustainability commitments. The research is motivated by regulatory pressures, risk management needs, and sustainability goals, necessitating an adaptation of traditional underwriting models. The study employs a modified Delphi method with industry experts to identify key risk factors, including accident risk, repair costs, battery safety, driver behavior, and PCAF carbon impact. A sensitivity analysis was conducted to examine premium adjustments under different risk scenarios, categorizing EVs into four risk segments: Low-Risk, Low-Carbon (L1); Medium-Risk, Low-Carbon (M1); Medium-Risk, High-Carbon (M2); and High-Risk, High-Carbon (H1). Findings indicate that premium EVs (L1 and M2) exhibit lower volatility in underwriting costs, benefiting from advanced safety features, lower accident rates, and reduced carbon attribution penalties. Conversely, budget EVs (H1 and M1) experience higher premium fluctuations due to greater accident risks, costly repairs, and higher carbon costs under PCAF implementation. The worst-case scenario showed a 14.5% premium increase, while the best-case scenario led to a 10.5% premium reduction. The study recommends prioritizing premium EVs for insurance coverage due to their lower underwriting risks and carbon efficiency. For budget EVs, insurers should implement selective underwriting based on safety features, driver risk profiling, and energy efficiency. Additionally, incentive-based pricing such as telematics discounts, green repair incentives, and low-carbon charging rewards can mitigate financial risks and align with net-zero insurance commitments. This research provides a structured framework for insurers to optimize EV underwriting while ensuring long-term profitability and regulatory compliance.

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Cite This Study

Lin et al. (Fri,) studied this question.

synapsesocial.com/papers/68c1b19354b1d3bfb60e8b6f https://doi.org/https://doi.org/10.3390/wevj16080430

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