Ankur Gupta, head of client management, Munich Re India Branch, revealed that the reinsurer, after launching its Solar Photo Voltaic Performance Warranty , has recently unveiled two new products for fast expanding Electric Vehicles(EVs) segments -Extended Warranty Insurance for EV 2W batteries and a Comprehensive Extended Warranty for EV 2W
Mumbai:
Expanding its India operations, Munich Re, the largest global reinsurer, along with surety bonds, has launched suite of green solutions like Extended warranty for Electric Vehicles (EV) and Solar Photo Voltaic Performance Warranty in the country .
Speaking to AIP, Ankur Gupta, head of client management, Munich Re India Branch, revealed that the reinsurer, after launching its Solar Photo Voltaic Performance Warranty, has recently unveiled two new products for fast expanding EV segments. They are -Extended Warranty Insurance for EV 2W batteries and a Comprehensive Extended Warranty for EV 2W.
Munich Re, which had set up its India operations as one of the Foreign Reinsurance Branch(FRB) in 2016, has mobilised over Rs 9,000 crore of premium in the Indian market during Fy2022- 23 and has emerged as the largest FRB, among 11 FRBs, in the country.
Extended warranty for Electric Vehicles (EV)
The products were launched recently in partnership with Acko and Ola. Both products extend the protection for the battery, which is the key component in the EV scooter, by two years over and above manufacturer warranty of five years.
“ The product addresses the longevity concern of the consumer, whether the batteries would perform for a longer duration. As of now, only one insurer is offering it but a few more are in the process of finalising the product design,’’ he said.
The comprehensive product also covers other components of the vehicle like Motor, Charger, Head unit, etc. This product guarantees the performance of Lithium-ion batteries installed in a vehicle up to a defined range of distance driven or for a five year time period (whichever is earlier).
At the time launch of this product, EV 2W almost contributed 4.5 per cent of new 2W sold in the Indian market, compared to 1.9 per cent in Oct-21.
“We had a very high degree of confidence on this product even before we launched it. Indian consumers have a long-term view in mind for the purchase of any asset. The jump in demand and entry of new-age orginal equipement manufacturer (OEMs) make this business very exciting and we expect the trend to continue, In our discussions with the OEM and client groups, we came to the conclusion that the three-year manufacturer warranty offered was a limiting factor impacting the purchase decision for an EV negatively,’’ explained Gupta.
“The product has an even higher uptake than anticipated, as we are not only seeing demand from new vehicle owners but also from people who had bought their vehicle one year back and who are now signing up for this program. We are currently building more capabilities to meet the increasing demand,’’ informed Gupta.
Due to the design of this product, the claims under the policy can only be made three years after purchase. The claims will start flowing from the H2-2024 onwards.
The premium for the product depends on the type of vehicle and the battery capacity and quality.
A battery only Extended Warranty can be bought by customer in the range of Rs 3,500 to 5,000 whereas a comprehensive product can be bought at the price range of Rs 6,500 to 8,000.
“We have designed multiple add-on products which are relevant for EVs. These would be sold with Motor Own Damage cover. Many risks arising due to inherent nature of EV can’t be captured in standard Motor OD coverages,’’ further informed Gupta.
On whether, any kind of cyber cover are being planned for connected vehicles by Munich Re, Gupta replied there is a significant cyber exposure in the connected vehicles.
“As a market trend we have seen the OEMs buying a B2B policy at their end, covering their entire customer base. Munich Re is a leader in Cyber Insurance ,’’ he said.
“EV is an evolving topic not just for the customer but also for insurers. The risk associated with an Internal Combustion Engine (ICE) vehicle is completely different as compared to EV. The risk associated with batteries is long-term which leads to uncertainty and reserve creation in insurer’s balance sheet. As a leading reinsurer, we have experience of handling such risks in multiple markets. Hence we can support our clients in India with our expertise,’’ averred Gupta.
Also non EVs need reinsurance from accumulation perspective as tThe impact of climate change has led to a rise in frequency of natural catastrophes and automobile segment is adversely affected during floods/cyclones leading to accumulated losses for insurers which are/can be reinsured. Besides this, the bodily injury claims could also have high severity and hence leading to reinsurance requirement, stated Gupta.
Solar Photo Voltaic Performance Warranty:
“We are working with almost all key PV manufacturers and covered 43 per cent of the new Installed capacity in India 2021. This is a major achievement for a product which is just few years old. It shows the ability of Munich Re and the trust that our clients have put in us.
There are claims reported under PV warranty, but the reinsurer doesn’t not disclose the quantum and number of losses. Also, it is a long term product of 25-30 years, so has to be monitored closely how it develops over time
Currently five insurer are offering this product including one public sector insurer and there are two-three active reinsurance players in this segment, with Munich Re being the market leader
On whether any demands coming from other segments of green energy industry, Gupta said ,
“Yes, we are also seeing demand from EV battery, Energy storage and from Hydrogen energy.’’