Autonomous Vehicles Impact to Auto Insurance Industry

A report done by KPMG said that the auto industry might struggle when autonomous vehicles are launched for public use. The report stated that their research showed that once consumers understood the potential benefits of autonomous vehicles, they were hooked. In the report, it is also said that each driver had a unique value proposition and autonomous vehicles offered broad appeal such as the ability to multi task, faster commutes, safer travel and more independence to name a few.

Autonomous vehicles promote lesser accidents as accidents are normally caused by human error. Therefore by using autonomous vehicles, there will be a 80% potential reduction in accident frequency per vehicle by 2040 which resulting in around 0.009 incidents per vehicle. This could mean lesser need to make a claim to the insurance company and therefore the premium paid to the insurance company will be lower in the future as it is lower risk.

It seems like this has been happening even before a full autonomous car official market release. Drivers are already making fewer claims due to partial automation built into new cars such as automatic braking, adaptive cruise control and lane drift prevention which all these is helping in reducing common crashes.

David Zuby, executive vice president and chief research officer in Insurance Institute for Highway Safety said that vehicles equipped with front crash prevention technology had a 7% to 15% lower claim frequency under property damage liability coverage than comparable vehicles without it. He also added that further automation, if successful, could lead to even further reduction of insurance claims.

Even using autonomous cars, accidents will still be happening. However, the cause might be different. It might be due to external factors such as animals suddenly running onto the road, bad weather or system malfunction. However, there are times when the manual mode is activated and that a human driver will take control of the vehicle. This could be one of the potential reasons for claiming insurance but the percentage might be very low.

Whatever it is, changes bound to be happen in the way that we claim our insurance after a fully autonomous car is available in the consumer market.

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