Earlier this year, I predicted that, “2017 promises to be the year when driverless cars proliferate across the American roads and highways,” and posed the question, “How will insurers respond?”

Thanks to Tesla’s announcement that it will begin offering insurance with its electric vehicles in Asia, all of a sudden insurance took center stage within the ongoing autonomous vehicle conversation.

Within the last month, there were two reports that arrived at the same conclusion: Driverless cars will transform auto insurance.

London-based Fitch Ratings provided this analysis in its driverless cars report: “Widespread adoption of autonomous vehicles will completely transform the motor insurance sector in the long term as liability shifts towards manufacturers and the traditional risk pool shrinks.”

The report highlighted the question of liability in the event of a crash involving an autonomous vehicle and said it will be “fundamental” to the future of the motor insurance industry.

“As the transition progresses, we expect to see risk coverage shifting from personal motor insurance policies to commercial product liability. Early indications of this trend can be seen in the UK’s regulatory proposals, which would require compulsory motor insurance for self-driving vehicles but would enable the insurer to reclaim costs from the manufacturer if a crash was caused by technology failure.”

Fitch Ratings predicts that some insurers will be forced to diversify in search of other profit sources and some of those that fail to adapt will disappear. But the firm was quick to point out that the changes will take at least a decade and that “the transition will create new opportunities in the sector, especially for firms that can take advantage of a massive increase in data to price risk more accurately.”

Altimeter Group, in its report titled, “The Race to 2021: The State of Autonomous Vehicles and a “Who’s Who” of Industry Drivers,” presented similar findings.

“Autonomous technology will ultimately change the entire automotive industry and supporting ecosystems and supply chains, ownership, financing and insurance,” wrote Brian Solis, principal analyst for Altimeter. 

He added that automotive financing could shift from individual ownership to shared ownership models. “As new ownership scenarios play out, insurance and maintenance industries will also need to productize new solutions to various stakeholders. Insurance companies will stabilize potential losses in traditional income with modern “scenario-based” premiums,” he predicted. 

The message from both of these reports is clear: It’s time for leaders in insurance to keep a close eye on the self-driving car industry and start making their five- and 10-year plans to deal with the changes. 


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