Monte Carlo, Monaco -- September 13, 2016 -- Automotive premiums in the US could decrease by 20 percent by 2035, assuming autonomous vehicle (AV) technology is adopted at even a moderate pace. That's according to a new report released by Aon Benfield.
The annual Global Insurance Market Opportunities (GIMO) report examines key areas of potential growth and disruption for insurers. The latest edition, Riding the Innovation Wave, also reveals that premiums could potentially decrease by more than 40 percent by the time AVs reach full adoption in 2050.
The first commercially available technology is expected to hit the road in 2018. The report's forecast assumes an 81 percent reduction in claims frequency. It also assume a corresponding increase in severity, due to sensor costs and an increased cost of handling product liability claims.
Personal automotive insurance accounts for 47 percent of global insurance premiums, according to the report. Substantial decreases in automotive premiums could be a big challenge for insurers.
"Adoption of autonomous vehicles will of course be affected by many variables such as regulatory challenges, cost to the consumer, safety, vehicle ownership preferences, and the technology itself," said Paul Mang, CEO of Aon Analytics. "However, we as an industry need to act quickly to ensure that we have the products available to align to the new paradigm; if we fail to do so, we only invite disruption."
The complete report is available for download at this link.