Self-driving cars threaten a “seismic” change to the multi-billion pound motor insurance industry, with the number of accidents on the roads plummeting as computers take the wheel.
Research for a motor industry conference predicts an 80pc drop in crashes over the next 20 years thanks to so-called “autonomous vehicles”.
Drivers in Britain pay £14.2bn a year in motoring premiums – representing more than 40pc of all non-life premiums – and fewer accidents on the roads mean this massive industry faces huge disruption.
Data from the Association of British Insurers (ABI) shows the average UK motoring policy costs £429, but also reveals the industry has not made an underwriting profit on selling the premiums since 1994.
Volvo is one of the motoring companies at the front of the starting grid when it comes to self-driving cars. Last week it announced it would have 100 of its autonomous cars on London’s road by 2018 and has pledged that by 2020 self-driving systems will mean that no one will be killed or seriously injured by a new Volvo.
Håkan Samuelsson, chief executive of Volvo Cars, said: “The impact on the insurance industry is likely to be significant but let’s not forget the real reason for this – fewer accidents, fewer injuries, fewer fatalities. Autonomous driving cars are the single most important advance in automotive safety to be seen in recent years.”
Driver aids such as automatic braking are already reducing the frequency and seriousness of accidents, and data from reinsurer Swiss Re and digital mapping business Here forecast that with the spread of autonomous driving technologies, premiums will cost 43 per cent less worldwide by 2035 than they would without.
Although fully autonomous cars are at least a decade away, the conference warns that unless insurers start to examine the implications now, they face being left behind by new entrants to the market with a greater understanding of the changes new technology will bring to the industry.
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