If autonomous vehicle technology is adopted at even a moderate pace, U.S. auto insurance premiums could decrease by 20 percent by the year 2035 compared to their 2015 levels – and potentially by more than 40 percent by the time that autonomous vehicles reach full adoption in 2050 – according to a new report, Riding the Innovation Wave, from Aon Benfield.
With the first commercially available technology expected to hit the road in 2018, the forecast assumed an 81 percent reduction in claims frequency, and an increase in claims severity due to sensor costs and an increased cost of handling product liability claims.
Personal auto accounts for 47 percent of global insurance premium and, Aon Benefield said, without this ballast and implicit capital subsidy, U.S. property-casualty insurance volatility could increase by 40 percent.
Paul Mang, the chief executive officer of Aon Analytics, said, “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. 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.”
Learn more: http://www.aon.com/.