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Insuring the EV future: How cross-sector collaboration can de-risk the transition
How the insurance, transport & finance sectors can collaborate to de-risk the UK’s electric vehicle transition for a net zero future.
Read time: 6 mins Added: 24/10/25
Charging ahead: Insurance in the EV Era
As the UK accelerates towards a net zero future, the electrification of transport is no longer a distant ambition, it is a present-day imperative. In 2024, battery electric vehicles (BEVs) accounted for nearly 20% of all new car registrations, up from 16.5% the previous year. While electric vehicle (EV) adoption is rising, the insurance sector faces a complex set of challenges and opportunities in supporting a transition that is sustainable, inclusive and investable.
To explore these dynamics, Lloyds Corporate & Institutional convened a cross-sector roundtable during this year’s London Climate Action Week, drawing on its broad client base and trusted brands across transport, insurance, and financial markets to bring together senior leaders from across the industry - including vehicle manufacturers, insurers, and market experts. From the discussion, five critical themes identified are helping shape the insurance response to the EV transition.
1. Affordability and access: unlocking the used EV market
While new EVs are becoming more competitively priced, the real growth opportunity lies in the, currently underdeveloped, used market. As more models enter the second-hand market, affordability improves.
“Used EVs are key to mass adoption, but insurance and financing models haven’t caught up,” noted one fleet operator.
Insurance plays a pivotal role here in influencing total cost of ownership, affecting financing options and ultimately shaping consumer behaviour. Leasing models, such as used EV leasing and salary sacrifice schemes, are helping to broaden access, particularly if the insurance eco-system can deliver more predictable, consistent pricing.
“We launched a used EV leasing proposition and vehicles go within 8 to 9 days,” noted one participant, highlighting latent demand.
Ricki Roost Remarketing and Insurance Manager, TuskerWe’re seeing growing interest in used EV leasing, but insurance pricing needs to be more predictable. Customers want clarity on total cost of ownership—not just the monthly lease.
Greater transparency in how EV insurance premiums are calculated, including repair costs, write off triggers and battery performance will be essential.
2. Residual value risk: A barrier to insurance innovation
Residual value uncertainty remains a significant barrier to innovation across insurance, fleet financing, and capital markets. Rapid depreciation driven by fast evolving technology, shifting policy incentives, and limited historical data creates pricing challenges for insurers, especially when determining total loss thresholds and premium levels. It also complicates risk assessments for fleet operators and asset-backed securities linked to vehicle portfolios.
“We need better data and more consistent valuation standards to underwrite this risk with confidence,” said a participant from the insurance sector.
While some insurers are beginning to pilot risk-sharing models to manage this exposure, broader confidence will depend on more consistent valuation standards, greater transparency on battery health and degradation, and potentially government-backed mechanisms to support the market through the transition period.
Ashley Barnett Senior Manager, Strategic Consultancy & Sustainability, Lex AutoleaseResidual value risk is holding back innovation in fleet financing and insurance. We need to establish a functioning wholesale market for EVs defleeting so they can be retailed for used EVs.
3. Battery health and repairability: the data deficit
Battery health is one of the most material and most poorly understood risk factors in the EV ecosystem.
“There’s no standard for battery health reporting,” said a manufacturer. “We need something like an energy rating label for batteries.”
There is currently no common industry standard for measuring or reporting battery performance, with wide variation in how manufacturers capture and share state-of-health (SOH) data. This lack of transparency adds complexity to underwriting, inflates uncertainty around repair vs. write-off decisions, and undermines residual value confidence.
A clear opportunity exists to develop an industry-backed battery health reporting standard, one that is trusted, transferable, and accessible across stakeholders. Improved diagnostics would not only support better insurance pricing but also enable more effective second-hand vehicle assessments and reduce unnecessary write-offs, contributing to both commercial outcomes and circular economy goals. Greater coordination between vehicle manufacturers and insurers on repair standards and parts access is seen as essential.
From embedded insurance to dynamic pricing based on vehicle telematics, data-driven innovation is a recurring theme, with data-sharing remaining fragmented especially between vehicle manufacturers, insurers, and intermediaries and needs to improve if the market is to evolve.
4. Misinformation and consumer confidence: A communications challenge
Persistent misinformation is slowing the EV transition. Public perceptions around battery safety, repair costs, insurance premiums, and range limitations are often shaped by outdated assumptions or unverified headlines.
One participant shared consumer data: “Over 2 in 5 consumers are considering an EV for their next car, and most EV owners who charge at home save over £750 a year.”
Misconceptions create friction in the market, deterring consumers, fuelling premium anxiety, and complicating conversations between brokers, insurers, and end users.
Misinformation continues to undermine trust. “We need to stop triggering range anxiety with insurance products like ‘out of charge cover’,” said one insurer.
There is a clear role for industry collaboration in addressing this not through isolated marketing campaigns, but via coordinated, evidence-based messaging. By improving how the market communicates with consumers, fleets, and intermediaries, stakeholders can help rebuild trust, accelerate adoption, and support more informed decision-making across the value chain.
5. Collaboration is key: No one can solve this alone
The scale of the EV transition demands systemic collaboration. From data sharing and repairability standards to underwriting innovation and customer engagement, the most pressing challenges cannot be solved in silos.
“We can’t solve this in silos,” said a repair network CEO. “Let’s share data, develop standards, and create mechanisms to de-risk the market.”
Insurers, vehicle manufacturers, policymakers, fleet operators, and financiers each hold part of the solution, but unlocking progress will require greater alignment across the value chain.
The roundtable underscored a shared willingness to collaborate and a recognition that the industry is stronger when it works together. Cross-sector partnerships, common frameworks, and open dialogue will be critical to enabling a resilient, affordable, and inclusive EV insurance market.
Nick Williams Managing Director –Transport, Lloyds Banking GroupThis roundtable showed the power of bringing together different parts of the value chain. Our clients don’t operate in silos—and neither should we.
Calls to action: Clear emerging priorities
- Support the used EV market through innovative leasing models, insurance solutions, and targeted incentives
- Develop and adopt a standard for battery health reporting to support underwriting, resale, and consumer confidence
- Improve repairability and recycling infrastructure to reduce write-offs and manage waste including critical minerals. Invest in diagnostics, training, and parts availability to reduce unnecessary write-offs and improve claims outcomes
- Collaborate on consumer education to dispel myths and promote informed EV adoption
- Explore risk-sharing mechanisms, including potential government-backed schemes to support residual value and insurance innovation
Victoria Whitehead Managing Director, Head of Infrastructure & Transport, Lloyds Corporate & InstitutionalWith domestic transport responsible for c.30% of the UK’s total emissions, and private vehicles representing over 50% of those transport emissions*, the transition to electric vehicles represents one of the most impactful opportunities for the nation to decarbonisation and support the achievement of the UK’s legally binding commitment of Net Zero by 2050. By prioritising the transition to EVs, which in parallel will also require robust support for charging infrastructure, the UK Government can make significant strides towards a cleaner, net zero future.
Looking ahead
The insurance industry has a pivotal role to play in the EV transition not only in pricing risk, but in enabling a market that is inclusive, scalable, and resilient. As EV adoption expands, the need for joined-up solutions across underwriting, battery diagnostics, residual value protection, and customer communication will only grow.
Hannah Simons Head of Sustainability, Sustainability Markets Advisory, Lloyds Bank Corporate MarketsLloyds Corporate & Institutional is ideally placed to support this shift and invites clients and partners to continue the conversation. Whether you are navigating fleet electrification, insurance innovation, or investment in EV infrastructure, we are here to help unlock opportunity across the value chain.
Learn more
With over 200,000 Battery Electric Vehicles (BEVs) in our portfolio of c.1.2 million vehicles, Lloyds Banking Group’s Transport business funds approximately 1 in 8 BEVs on the road (cars and light commercial vehicles).
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Information correct as of 8th October 2025
Lloyds Banking Group is a financial services group that incorporates a number of brands including Tusker & Lex Autolease. More information on Lloyds Banking Group can be found at lloydsbankinggroup.com.