Article
Autonomous vehicles and the insurance industry
Insurers confront the "when" and "how" of self-driving cars
As consumers increasingly embrace the future of mobility, auto insurers should position themselves to take the driver's seat—or they could lose the race.
With sensor-loaded cars poised to reduce accidents by 90 percent, and ride-sharing/ride-hailing trends pointing toward decreased vehicle ownership, the auto insurance industry could be challenged to compensate for the apparent inevitability of falling premium rates and perhaps a substantial volume of business.
The transitional timeframes wherein AVs could share the road with human-driven vehicles, and the longer term, when self-driving cars may dominate, will likely force a fundamental shift in insurers' product mix, as they would for underwriting, pricing, and business models.
These changes could prompt the following actions:
- Recognize that rate of change by geography and age may vary
- Develop more technical underwriting capabilities
- Prepare for incremental changes to cost structures
- Navigate with insufficient or incomplete data, and exploit emerging sources
- Establish advanced analytics capabilities
- Plan for product and business-line shifts—including offering driverless car insurance
- Retrain claims adjusters to interpret intricacies of shared driving
- Recognize the threat of non-traditional competitors
Insurers will likely need to quickly find their footing through the transitioning mobility ecosystem. It is likely that only those insurers with a flexible business model and diverse product mix may thrive going forward, as technological and societal trends take hold at an uneven pace in the autonomous vehicles and insurance industries.
Insurers confront the "when" and "how" of self-driving cars
