What impact will electric trucks have on carriers' insurance rates?

Speaker 1 (00:00):

CCJs 10 44 is brought to you by Chevron Delo, heavy duty diesel engine oil. Now there's even more reasons to choose Delo. How will electric trucks change motor carriers insurance premiums? You're watching CCJs 10 44, a weekly episode that brings you the latest trucking industry news and updates from the editors of CCJ. Don't forget to subscribe and hit the bell for notifications so you'll never miss an installment of 10 44. Hey everybody, welcome back. I'm Jason Cannon and my co-host, as always. On the other side is Matt Cole. Insurance is one of the largest expenses for trucking fleets, and it's a business that's built on trends and historical data. That's a couple of key things that we don't have on electric trucks, so there's really no reason to expect that the premiums carriers pay now will look anything like the premiums that they will pay eventually when they go to electric trucks. Batteries are expensive and the training it takes to work on electric vehicles is sophisticated, and it's not like there's a BEV junkyard out there if you're in the market for cheap aftermarket replacements. Christie Neal, head of enterprise growth at cover. Whale joins the 10 44 this week, and she's got some expensive news as it relates to paying for vehicle damage.

Speaker 2 (01:12):

Firstly, electric trucks, they have a higher initial purchase price, right? They're way more than your traditional trucks that exist today, meaning that the cost to repair them is going to be quite a bit more. So when it comes to your auto physical damage, I would say that's where the rates increase for electric vehicles simply because of the value of these vehicles. From the auto liability standpoint, it's pretty much the same and cover well insurers, a small fleet of electric vehicles today, more short haul, but really no issues. Rates are competitive when it comes to from the auto liability side, but again, it's the auto physical damage side where we tend to be really high or the insurance industry and whole tend to be really high.

Speaker 1 (01:54):

Insurance rates are very much driven by an individual carrier's risk profile, and that won't change with EV trucks, but it makes forecasting what kind of increase any given carrier might see in their transition to EVs. Difficult to predict,

Speaker 2 (02:06):

Right? It's going to vary by their distance that they travel, their long haul short haul. It's going to vary by the territory that they're in. Do you know what region they're in? But from an auto physical damage standpoint, I would say it's probably double right because the cost to repair them, the maintenance, if anything were to happen, is going to be a lot higher than your traditional trucks today. For instance, the battery life and performance can vary significantly based on usage and maintenance, so that can complicate the risk assessment altogether, which could implicate the auto liability risk exposure. There's also evolving regulatory landscape regarding emissions and energy use, which can affect the insurance considerations as well. So on all and all, it could possibly affect the overall risk of the auto liability, auto physical damage, motor truck cargo, and things that go along with that.

Speaker 1 (02:55):

Now, there's a lot of hope pinned to more electric trucks hitting the road, driving down costs. That's the case for insurance rates too, and Christie says rates could actually dip a little lower than where they are today. She tells us how after a quick word from 10 44 sponsor Chevron lubricants.

Speaker 3 (03:12):

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Speaker 2 (04:51):

I actually think that they could possibly be better right at cover. Well, today we already track driving behaviors through a LD and telematics, right? And electric trucks are equipped with advanced telematics and sensors that provide a wealth of data. Some of the data that we're getting today and maybe more data than what we're getting today when it comes to electric vehicles on the road. So by analyzing and driving the driving patterns, the maintenance records, which is a huge one because that shows, I mean, if they have up-to-date maintenance records, they're taking care of their vehicles, then we already assume they're a better fleet of owner operators, right, than somebody who isn't staying up on their maintenance schedule. So when you think about all those things, you can get better rates to the drivers who demonstrate the safe driving behaviors and properly maintain the vehicle. So data-driven approach not only helps customize premiums, but also encourages safer drivers on the road.

(05:39):

So at the end of the day, we're accomplishing everything that we want to accomplish in the world, right? Make roads safer, cut down on the environmental, right? When you have these electronic vehicles, you don't have that exhaust out there on the road for 11 hours a day, as well as making the drivers safe and providing a safer environment for everybody around. So I do think in the long run, the electric trucks are going to prove better on the road all the way around, and also provide better ROI for the fleet owner themselves. I do think that the future of electric trucks, it is promising is transformative. I mean, we're going that way, right? So as insurance carriers or MGAs or anybody out there in the insurance world that's focused on transportation, it's just really getting ahead of that and thinking how we can be innovative in regards to helping these truck drivers out there on the road, what we can do at the end of day to help them put money back in their pockets, but also help our insurance carriers stay competitive as well, meaning keep their loss ratios down, those claims down. So having these EVs and all the sensors out there, having all the telematics data, we're able to do it in a way that we would never have been able to do it before.

Speaker 4 (06:45):

A lot of emphasis has been put on how important it is for fleets considering EVs to first speak with their truck manufacturer and their local utility. But Christie says, leaving your insurance carrier out of those preliminary discussions will probably lead to some unwelcome surprises when you take possession of the truck.

Speaker 2 (07:02):

You think it's a partnership all the way around, right? Talking to these fleet owners and understanding the type of technologies that they've already partnered with in regards to whatever their ELDs are, their cameras are, and now the EVs and bringing all that data in. So it could be whatever kind of partnership that you may form with the actual manufacturer, say Tesla, for instance. What kind of data can we get from these EVs and bringing that into the overall insurance rating factor. So discounts for driving safer on the road, discounts for better maintenance discounts because they do have an EV vehicle and they have to adhere to all these safety measures out there on the road. So it's a risk assessment overall around the entire fleet of vehicles and what kind of safety measures that they're bringing to the table with a different type of technology that they have embedded within the truck itself.

Speaker 1 (07:52):

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