Self-driving cars are set to overhaul a number of industries, but arguably the most impacted by the rise of automated vehicles will be the auto insurance industry. Some analysts and automotive experts even suggest that the auto insurance sector will be impacted negatively by self-driving cars, as it will shrink because of the apparent positives of the autonomous vehicle.
Indeed, some industry insiders are worried about a significant downsizing of the market as the auto insurance landscape changes forever.
Autonomous vehicles are expected to bring a previously unprecedented level of safety to roads, with collisions predicted to fall by huge quantities by 2050. Self-driving vehicles could even eliminate accidents entirely as 95% of all collisions or road related fatalities are caused by human error.
On top of this, it is unlikely that owners of autonomous vehicles will need auto insurance as they would not actually be operating the vehicle. This essentially means that they are not liable for any collision, so insurance companies will be putting liability onto manufacturers. Vehicle companies have already suggested they are comfortable with this new system, but details on how the auto insurance industry would work with vehicle makers remains to be seen.
These sweeping changes are not expected for some time, with the first truly autonomous vehicles not expected until 2025. There will be other drivers in non-self-driving vehicles who will start have traditional auto insurance coverage, but times are changing. Over the next 20 years more than 50 per cent of all vehicles will be autonomous and the auto insurance industry needs to prepare now for the changes.
Over the next 25 years the auto insurance industry will be hit, with KPMG, an advisory and research firm, suggesting that the auto insurance sector could decrease to 40 per cent its current size. The industry could be reduced to just providing coverage for theft and non-collision accidents such as weather damage.