Recent reports of electric vehicle (EV) fires – including a fatal residential blaze in India that claimed eight lives, reported by Times of India, and a vehicle fire in South Africa covered by MyBroadband – are sharpening focus on a risk category that is evolving faster than underwriting models.
Although early reports in the India incident linked the blaze to an EV charging explosion, investigations are ongoing. What is clear, however, is that such events – particularly when compounded by factors like confined spaces, gas cylinders, or delayed access – can escalate rapidly. The local incident, in which no injuries were reported after a Volvo EX30 caught fire in Johannesburg on 12 March, reinforces that these risks are no longer abstract for South African insurers.
Yet, context is critical. Evidence consistently shows that EVs are far less likely to catch fire than internal combustion engine (ICE) vehicles. Studies indicate that only about 0.0012% of EVs have experienced battery fires, compared with roughly 0.1% of petrol or diesel vehicles. The challenge for insurers is not frequency – but severity.
A fundamentally different fire risk profile
EV fires behave differently. In an Africa Ahead opinion piece, Kelvin Musa Keya, a business development and bancassurance officer at Meticulous General Insurance in Tanzania, notes that lithium-ion batteries introduce “new emerging risks associated with electric vehicles”.
These risks stem from thermal runaway – a chain reaction within the battery that produces intense heat, releases oxygen, and sustains combustion.
This makes EV fires hotter, longer lasting, and significantly harder to extinguish than conventional vehicle fires. In practical terms, this translates into higher loss severity, increased property damage, and more complex claims environments – particularly where fires originate or spread via charging infrastructure.
For insurers, this shifts the risk calculus from traditional accident-based modelling to a broader exposure framework that includes energy storage systems, charging behaviour, and environmental conditions.
Underwriting models under pressure
Keya argues that “electric vehicles are reshaping the insurance landscape in Africa by introducing new risk dynamics, higher repair costs, advanced technologies, and the need for specialised underwriting expertise”.
Traditional rating factors – engine size, age, and historical claims data – are less predictive in an EV context. Instead, insurers must account for battery condition, software integrity, charging practices, and repair ecosystem maturity.
Repair severity is a central concern. EVs can cost approximately 20% more to repair than ICE vehicles, driven by expensive components and limited technical capacity. Battery packs alone can account for 30% to 50% of a vehicle’s total value, meaning that even minor impacts may result in a total loss if battery integrity is compromised.
Keya notes that “even minor accidents can result in significant claims if the battery system is affected”, highlighting a structural shift towards higher average claim costs.
Latent and emerging risks
Beyond collision damage, EVs introduce a range of less visible exposures.
Battery systems are sensitive to impact, manufacturing defects, and environmental factors such as flooding. Water ingress, for example, may not cause immediate failure but can lead to corrosion, electrical faults, or delayed ignition risk. This introduces a layer of latent risk that is difficult to detect and quantify during underwriting or initial claims assessment.
Charging infrastructure adds another dimension. Faulty installations, equipment malfunctions, and inconsistent safety standards – particularly in residential settings – create additional fire and liability exposures. Keya points to risks including “equipment malfunction, defective installation, cyber vulnerabilities in connected charging networks, and grid impacts”.
These are risks that sit partially outside the vehicle itself, complicating policy design and raising questions around liability allocation.
Claims complexity and operational strain
Claims management is emerging as one of the most affected areas.
Assessing EV damage requires specialised expertise, particularly when high-voltage systems are involved. Insurers must determine whether a battery can be safely repaired, partially replaced or written off – decisions that carry materially different cost implications.
Keya emphasises that “assessing damage to high-voltage systems requires specialised knowledge and equipment”, and insurers will need to invest in skills and partnerships with certified repair networks.
The immaturity of the EV repair ecosystem in many African markets compounds this challenge. Limited availability of trained technicians, diagnostic tools, and parts can lead to longer settlement times, higher operational costs, and increased risk of secondary damage from improper repairs.
Salvage processes are also more complex, given the safety risks associated with storing and disposing of damaged lithium-ion batteries.
A small but fast-evolving market
Although EV adoption in Africa remains low – accounting for less than 1% of total vehicle sales – growth is accelerating. South Africa, with an estimated 6 000 EVs, is among the continent’s leading markets, alongside Ethiopia and Ghana.
Policy developments across the region signal a clear trajectory towards increased electrification, even if approaches differ. For insurers, this creates a window to adapt before EVs reach meaningful scale in portfolios.
Repricing risk – and opportunity
However, EV risk is not one-sided.
EV owners often exhibit different behavioural patterns, including lower annual mileage and potentially safer driving habits. Over time, as more credible claims data becomes available, insurers may be able to refine pricing models to reflect lower accident frequency – partially offsetting higher severity.
However, in the near term, uncertainty is likely to keep premiums elevated.
For South African insurers, the strategic imperative is to balance statistical reassurance with operational reality.
Keya concludes that “insurers must be prepared to adapt swiftly and strategically”, warning that those who fail to integrate EV-specific risks into underwriting and pricing frameworks risk falling behind.
