The automobile insurance industry is about to face a period of radical restructuring with the advent of autonomous cars, according to Hakan Samuelsson, president and chief executive of Volvo Cars.
Samuelson was speaking at seminar held in London called ‘A Future with Autonomous Driving Cars – Implications for the Insurance Industry', which was organized by Volvo Cars and Thatcham Research, the research arm of the British insurance industry.
“Research in the US by NHTSA (National Highway Traffic Safety Administration) predicts that by 2035, as a result of autonomous and connected cars, crashes will be reduced by 80%,” explained Peter Shaw, chief executive at Thatcham Research. “Additionally, if a crash unfortunately can’t be avoided, then the impact speed will also drop as a result of the system’s performance - reducing the severity of the crash.”
Volvo believes that the insurance industry will have no choice but to react to these seismic challenges to its existing business model.
“The medium to long term impact on the insurance industry is likely to be significant,” said Samuelson. “But let’s not forget the real reason for this – fewer accidents, fewer injuries, fewer fatalities. Autonomous drive technology is the single most important advance in automotive safety to be seen in recent years.”
Shaw further explained, “Vehicle manufacturers are predicting that highly autonomous vehicles, capable of allowing the driver to drop ‘out of the loop’ for certain sections of their journey, will be available from around 2021. Without doubt, crash frequency will also dramatically reduce. We’ve already seen this with the adoption of Autonomous Emergency Braking (AEB) on many new cars.”
According to a recent white paper by the global reinsurance firm Swiss Re and the mapping firm HERE (recently acquired by Audi, BMW and Daimler from Nokia), the adoption of driver assistance and autonomous technologies could wipe $20-Billion (US) off insurance premiums globally by 2020. Currently, automobile insurance generates 42% of all non-life gross premiums, the largest single slice of global premiums, so that impact would be significant indeed.