Vehicle insurers are bracing for major changes as drivers begin transitioning to autonomous vehicles in a process that could be completed within the next decade, according to some experts.
“Insurers are studying this major market disruption very intently to determine exactly how it is going to impact our industry,” said Brenda Wells, the Robert F. Bird Distinguished Professor of Risk and Insurance at East Carolina University’s College of Business. “They have first made the realization that the auto insurance market will shrink with the rollout of autonomous vehicles.”
“This is an existential threat to insurers with a major exposure to auto insurance,” warned Alan Walker, executive vice president and digital insurance global lead at Capgemini Consulting. “If you look across both personal lines and commercial lines, vehicle insurance is some 30% of global insurance premiums.”
A large portion of the market for vehicle insurers is going to disappear within the next 10 to 15 years, Walker predicted.
A mixed bag
As self-driving cars inch closer to everyday users, vehicle insurers are facing a classic “good news/bad news situation.” Although automotive insurance isn’t likely to disappear entirely, the insurance market will almost certainly become more specialized and far less lucrative.
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