Welcome back to the latest episode of The Future of Automotive on CBT News, where we put the latest automotive and mobility news in the context of wider topics affecting the industry.
I’m Steve Greenfield from Automotive Ventures and I’m glad you can join us.
A great article by Keith Naughton in Bloomberg this past week summarized why car insurance continues to get more expensive.
The cost of U.S. auto insurance rose more than 22% in the 12 months ending in March, the biggest jump since 1976.
So what exactly is going on? Bloomberg highlights five main players.
First, cars are becoming more and more expensive to repair.
Much of this is due to the amount of technology in today’s cars. In a discussion with a garage recently, I discovered that the cost to replace a Toyota Camry bumper has increased from $500 to $5,000 over the last decade.
The second factor contributing to increased insurance costs is the fact that electric vehicles are more expensive to repair than internal combustion vehicles.
Why is that? The battery is a really expensive component that can be 40% to 50% of the entire cost of a new EV. In addition, there is a shortage of technicians and often the tools needed for EV repair work. Finally, in many cases, EV parts are more difficult to source.
Third on the list of reasons for higher insurance costs is the fact that we are experiencing both a greater frequency of crashes and a greater severity of crashes. Nearly 41,000 people died in US road crashes last year, up 13% from pre-Covid 2019 numbers. It’s unclear what role cell phone use and distracted driving may play in those numbers.
The fourth contributing factor? We are suffering from a prolonged period of shortage of both technicians and auto parts. The industry needs 800,000 more technicians to meet demand over the next five years. And EV mechanics are even harder to find.
Last but not least, insurance companies are playing catch-up for the dynamics during Covid. If you remember, drivers spent a lot more time at home, didn’t go to work, and didn’t take as many vacations. As a result, they simply did not put miles on their cars and in many cases insurance companies actually reduced premiums for a short time.
As vehicle use increased rapidly, we experienced a surge in traffic and crashes, and insurers in many cases suffered their worst underwriting losses in decades. So they have overcompensated by aggressively raising premiums to catch up.
Here it is.
As I look at this list, I’m not hopeful that the rising cost of vehicle insurance will cool down anytime soon. In fact, quite the opposite – I suspect that all five of these trends are likely to continue, meaning that the average consumer will find it increasingly difficult to pay for insurance on their vehicles.
So with that let’s move on to Our Watch Companies.
Each week we highlight interesting companies in the field of automotive technology for you to follow. If you’re reading my Intel Weekly Report, we’re featuring a company to watch, and take the opportunity here to share that company with you.
Today our new company to watch is ex9.
Ex9 offers unmanned transport as a service automating the movement of heavy loads at logistics terminals.
They have autonomous yard tractors for moving heavy loads such as trailers, containers, pallets and coils.
Ex9 makes automation affordable, safe and easy to use for indoor and outdoor use cases.
If you would like to learn more about ex9 and their automated transportation services for logistics and manufacturing terminals, you can check them out at www.ex9.tech
So that’s it for this week’s Future of Cars segment.
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Thanks (as always) for your continued support and for tuning in to CBT News for this week’s Future of Cars segment. See you next week!
