Electric highways

Electric highways | Insurance Business

Electric highways

The pressure on business to ‘go green’ isn’t anything new – it’s been happening for decades in a variety of forms, but it’s fair to say that it’s taken on an increased urgency in recent years. With motor vehicles as a whole frequently being singled out as key contributors to pollution, it was inevitable that the transport and logistics sector would come under scrutiny. Heavy vehicles are under pressure to reduce carbon emissions, investigate alternative fuel sources and introduce technology such as electric vehicles.

There are wider implications than just reducing pollution – what will the increasing amount of green technology mean for insurers? For his own part, Nick Dendrinos, head of NTI’s motor portfolio, is positive about the changes on the horizon.

“Look, the conversation has already been happening for a lot longer than most people realise,” he says. “We’ve known that diesel was a larger pollutant than other sources for a long time, so when you look at worldwide concerns about global warming and carbon emissions, it’s not really a surprise that it’s taken on greater prominence.”

Modern solutions for modern problems

Dendrinos says the conversation has likely sped up in part as a result of the COVID-19 pandemic. As transport operators have been realigning to cater for short-haul freight, there’s been a greater awareness of how their carbon emissions impact the environment and air quality.

“Since the pandemic really hit in Australia, we’ve seen an increased number of light, rigid trucks passing through urban and suburban areas,” Dendrinos says. “That’s largely been driven by a switch to online shopping and parcel delivery – people are wanting to stay home, while SMEs and larger retailers are looking for ways to keep their own businesses sustainable.”

Most of these vehicles are operating within a 100–300km radius, which Dendrinos notes is relatively short-haul. Accordingly, there will be increased pressure on transport operators both internally, from operators who want to be leaders in reducing carbon emissions, and externally, from contractors who are looking to bolster or protect their own green credentials.

“It’s a natural outgrowth of the Chain of Responsibility legislation,” Dendrinos says. “Companies are already required to operate in safe conditions and take preventative steps. So I think as things return to normal after the pandemic has died down and we begin to see more traffic on the roads in general as well as trucks, emissions will become increasingly topical around considerations of healthiness and sustainability.”

Dendrinos also sees it as an extension of wider tech-based safety measures within the industry. “Really, it’s about making the whole industry safer,” he says. “We’ve already seen the adoption of tech for things like ADAS [advanced driver assistance systems], fatigue management, driver management and staff induction. It’s an industry that can be dangerous – you’ve got huge distances, big vehicles and long hours in the car, so why wouldn’t we want to support tech that can make an improvement? Electric vehicles and alternative fuel sources are part of a wider drive within the industry.”

Roadblocks to progress

That’s not to say there aren’t obstacles ahead in the move to a more sustainable future for transport and logistics. Dendrinos names upfront cost, range and recharge infrastructure as three of the biggest current roadblocks to investment in electric vehicles.

“Certainly I think we’re going to see more electric vehicles on the road in the coming years, but cost, range and recharge infrastructure are all pretty big considerations,” he says. “It’s starting to become more palatable, but I think that we’ve still got to raise more awareness around the long-term benefints – they’re not the same as regular vehicles. There’s less maintenance required, less wear and tear, and their depreciation value is certainly better than on petrol vehicles.”

Realistically, Dendrinos believes that regulation will play a role in driving the adoption of such technology. Tax rebates or similar benefits will likely help stimulate demand and encourage uptake by helping to set the current cost.

“We’ve seen similar initiatives in other parts of the globe, and now you have a whole host of European companies that are very proud of their electric fleets,” he says. “It won’t happen overnight here, but I’m reasonably confident we’ll eventually see it here, too.”

New partnerships and new horizons

Dendrinos points to NTI’s new partnership with SEA Electric as a means to encourage further sustainability in Australia’s transport and logistics industry and to deliver greater insights into the best ways to provide effective insurance solutions.

“We want to be at the forefront and, accordingly, made a concerted effort to try and understand the nature of these vehicles,” Dendrinos says. “What sort of limits do they have? What sort of implications does that have from an insurance standpoint?”

From his perspective, education and advocacy are the two critical components. “Realistically, we want to be able to point brokers in the right direction for insurance,” he says. “So we’ve almost gone in at the grassroots level to cement our stance around providing that to the industry and support the electric truck movement in the process. It’s been great to connect with SEA Electric, as they’re really at the forefront.”

Future planning equals futureproofing

At present, Dendrinos says, some companies are treating electric vehicles as a fringe outlier with a premium to match. He understands the thought process, but he doesn’t think it’s a sustainable long-term approach.

“It’s the future. These aren’t just topical issues here; it’s the world over,” he says. “The considerations that companies and insurers alike are worried about – cost, how much load an electric truck can carry, battery lives, the time required to train drivers – all of these are going to improve.”

To this end, Dendrinos is dedicated to having NTI advocate within the broking space for effective coverage. “We’re heavily connected to the industry as a whole, and we want to ensure that brokers have confidence in the products we’re offering,” he says. “We want to make sure they know that we’re going to be supportive of customers who want to invest in new technology and provide them with the insights they need.”

These are logical extensions of existing initiatives that NTI has in place, Dendrinos says, including TruckAssist and the Business Health Check.

“Whenever we see new features emerging in the market, we want to make sure we’re on top of them,” he says. “With services like TruckAssist, we’re providing roadside assistance. So, accordingly, we need to be prepared for servicing electric vehicles, too, and looking at what sort of data we’re seeing in terms of incidents. It’s helpful for us and also, in turn, for everyone else involved in the insurance chain.”

Ultimately, Dendrinos believes that the more that can be done to reduce risk and promote environmentally friendly tech, it’s to the ultimate benefit of the industry and the world. “It’s all part of helping take care of the industry – making environmentally sound choices is part of that.”

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