Other parts of this series:
Last month, I talked about two studies that underscored the transformative effect driverless cars will have on the auto insurance industry. This month, two new studies delve deeper into the issue, trying to answer the crucial question: Whether self-driving cars present a threat or an opportunity to auto insurers.
Rethinking Transportation 2020-2030, released by RethinkX, an independent research group, examined three key factors: applications of the technology, laws and regulation regarding self-driving cars, and consumer attitudes toward autonomous vehicles.
“By 2030, within 10 years of regulatory approval of autonomous vehicles, 95 percent of U.S. passenger miles traveled will be served by on-demand autonomous electric vehicles owned by fleets, not individuals, in a new business model we call ‘transport-as-a-service’ (TaaS),” the study found.
“We are on the cusp of one of the fastest, deepest, most consequential disruptions of transportation in history,” said co-author Tony Seba, RethinkX co-founder. “But there is nothing magical about it. This is driven by the economics.”
The study predicts that demand for new vehicles will plummet: “70 percent fewer passenger cars and trucks will be manufactured each year. This could result in total disruption of the car value chain, with car dealers, maintenance and insurance companies suffering almost complete destruction.”
While the phrases ‘total disruption’ and ‘complete destruction,’ may sound ominous, co-author James Arbib elaborated further: “As with any market disruption, there will be winners as well as losers. Job losses in the driving, manufacturing and oil and gas sectors will be a key concern. But huge opportunities will open up as well.”
Leveraging this opportunity will not be easy for insurers, and will require a major shift in the culture of insurance organizations, our report acknowledges. However, it outlines specific areas with favorable possibilities: 1) cybersecurity, 2) product liability insurance for sensors and software and/or algorithms, and 3) insuring against infrastructure problems.
Insurers taking action now will, our report finds, have an important first mover advantage, not only over other insurers, but also against new disruptors.