Auto insurers will be impacted by self-driving cars
Safer roads could have a major impact on the auto insurance industry, and self-driving cars may be the cause, according to a new report from KPMG. The report predicts that the rise of driverless vehicles will have a significant impact on the auto insurance market, causing a shift in liability that some insurers may find it difficult to cope with. These vehicles have yet to see a widespread commercial release, but that may change in the coming decades.
60% decline in vehicle accidents expected to lead to fewer claims
According to the report, the private passenger sector of the auto insurance industry is expected to see a 60% decline over the next 25 years. This may be good news for consumers, as the emergence of self-driving cars, as well as ride-sharing services, may lead to 80% less accident claims by 2040. As a result, this will reduce the demand for auto insurance protection. For insurers, this could lead to a reduction in profits, but this may be offset by fewer claims that they are responsible for. A shift in liability could also lead to a change in the way insurance coverage works.
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Average cost of claims may be more expensive due to vehicles will costly technology
While there are expected to be fewer claims, the report from KPMG predicts that the average claim payment will increase from the $14,000 it is today to $35,000 by 2040. This is largely due to the fact that driverless vehicles are expected to be more expensive due to their use of new technologies. Liability will also shift from drivers to the company’s making these vehicles, as well as those developing the technology that makes vehicles autonomous.
Insurers will adapt to the evolution of transportation
Insurers are not blind to the potential impact of self-driving vehicles, of course, and many are expected to take steps to adapt to a changing auto insurance industry. The auto insurance industry will not vanish overnight, of course, and insurers will likely continue to provide coverage for vehicles of every kind. The evolving nature of transportation simply means that insurers must eventual evolve to new technologies that are emerging in the market.