Driverless Cars to Shrink Insurance Premiums
The cost of insuring an autonomous vehicle should fall 20% below current levels and may fall by as much as 40% by 2050, according to a new report from insurance analyst Aon Benfield.
Insurance industry "pure premiums" should fall 20% from 2015 levels by 2035, even if autonomous vehicles see only modest adoption, Benfield said. Premiums could fall by more than 40% by 2050, when autonomous vehicles are expected to reach full adoption.
Tesla Motors' Elon Musk has said his vehicles will include fully autonomous capability by 2018, which would be the first fully autonomous vehicles sold in the U.S. Ford has said it plans to sell fully autonomous cars to ride-hailing companies in 2018 and to the public by the middle of the 2020 decade.
Falling premiums would likely be due to falling accident repair claims. Benfield's forecast assumes an 81% decline in claims frequency.
Personal motor vehicle policies account for 47% of the global insurance premium. Without this ballast and implicit capital subsidy, U.S. property-casualty insurance volatility could increase by 40%, Benfield said.
To read Benfield's full report, click here.