’Just because something is green, [this] does not mean it is not going to pose a risk to the environment if it goes wrong,’ says associate director and head of environmental

Green initiatives, fuelled by concerns about global warming and climate change, have gained considerable momentum in recent years. However, are these initiatives inadvertently causing more harm than good?

In September 2023, prime minister Rishi Sunak promised that the Conservatives would take action to reduce carbon dioxide (CO2) emissions by 68% by 2030, as well as chart a pragmatic path towards achieving net zero emissions in the UK by 2050.

Sunak has sought to hit these targets using measures such as banning the sale of new petrol and diesel cars by 2035 and securing funding of £620m for zero emission vehicle grants and electric vehicle (EV) infrastructure.

In response to these initiatives, there has been a notable surge in the adoption of EVs across the UK as drivers increasingly opt for more eco-friendly transportation alternatives.

For example, figures released in insurer Allianz’s States of Mind New Mobility report – published on 20 June 2023 – showed that 60% of road users wanted to make the switch to driving EVs.

In addition, the report highlighted that 450 EV models were available in 2021 – twice the number that were available in 2018.

Allianz obtained this data after surveying more than 25,000 consumers across 10 major markets, including Australia, Belgium, Brazil, Canada, China, France, Germany, Italy, the UK and the US.

However, speaking exclusively to Insurance Times, Graham Hawkins, associate director and head of environmental at insurance services firm Charles Taylor, warns that “just because something is green, [this] does not mean it is not going to pose a risk to the environment if it goes wrong”.

Since joining Charles Taylor in July 2022, one specific challenge has captured Hawkins’ interest – the unintended environmental repercussions of “green” initiatives and how they affect the insurance industry.

The risks

For example, EVs present a new set of risks that the insurance industry must understand and tackle.

Hawkins explains: “Charging stations for electric vehicles, for example, take up a lot of space because the vehicles take longer to fill and this has an impact on the site.

“The cables that provide the power to the charging stations need to be high voltage and are cooled by an oil.

“[Therefore], consideration is needed to make sure these cables are not damaged in away way because there is a risk of having all these electric vehicles together. Then, if one of the cables are damaged, this can cause a fire.

“If a fire starts, this can cause a thermal runaway effect, which will make the EV explode because of the batteries inside. That is the risk.”

Thermal runaway occurs when the electrical current passing through a cell or battery during charging or overcharging raises the cell’s temperature, leading to an increase in current flow and a further temperature rise. This process can lead to lithium-ion batteries catching fire.

Lithium-ion batteries are rechargeable batteries that use lithium ions as the primary component of its electrolyte – these are commonly used in EVs.

In H1 2023, the London Fire Brigade described lithium-ion battery fires as “the capital’s fastest emerging and growing fire risk”.

Data from Honeywell Safety and Productivity Solutions, published in September 2023, supports this view – its findings showed that between July 2022 and June 2023, the UK fire services recorded 239 fires linked to EVs.

This marks an 83% increase from the 130 incidents reported during the same period in 2022.

The data further revealed that as of June 2023, there had been an average of 20.1 unintended EV fires per month – this is a 30% increase from the monthly average of 15.5 fires recorded in 2022.

Hawkins says: “Risk surveyors and risk managers are looking at the fire risks as much as anything.

“[These green initiatives have risks that] can become an environmental concern if you don’t contain what happens before the fire brigade arrives.”

Broker education

Hawkins believes that “there is probably a bit of learning needed” for brokers around the new risks posed by EVs. 

Although he acknowledges that some specialist brokers are “excellent” when dealing with green initiatives and their possible risks, he feels there is still a requirement ”to support some of the small brokers [that] may not have the specialist team”.

Therefore, collaboration is needed from all parties in the insurance value chain to address possible challenges, he says.

Hawkins adds that the insurance industry currently provides workshops, webinars and informative materials about the risks of green initiatives.