A reduction in claims is not necessarily a bad thing for insurers. Claims are expenses to an insurance company. The only thing that has ever gotten insurance companies into financial trouble has been increases in claims. Insurance companies can easily adjust to decreases.
What does this mean for insurers?
As AV technology develops, driverless cars become safer. Advanced Driver Assistance Systems (ADAS) https://en.wikipedia.org/wiki/Advanced_driver-assistance_systems have been proven to reduce fatalities and we anticipate that higher levels of autonomy will reduce risk even further. With reduced risk comes a reduction in claims, so insurers are bracing for a reduction in revenue from premiums. Which they will resist with all their corporate might...
AVs are also expected, to a significant degree, to shift vehicle ownership from large numbers of individual insurance customers with limited power to influence their premiums, to a few corporate owners with greater buying power. This too should force down premiums.
Insurers must also prepare for the new risks and opportunities, and develop new coverage models to address them:
AVs are also expected, to a significant degree, to shift vehicle ownership from large numbers of individual insurance customers with limited power to influence their premiums, to a few corporate owners with greater buying power. This too should force down premiums.Insurers must also prepare for the new risks and opportunities, and develop new coverage models to address them:
- Cyber-security risk – AV systems could be vulnerable to hacking.
- Software or hardware failures – driverless cars shift the burden of liability from humans to manufacturers
- Communication infrastructure risk – AV relies on a system of communication between road infrastructure and other vehicles.
