Autonomous driving to cost Insurance Industry $20 billion by 2020 - expert
Monday 13 June 2016, 4:59PM
By Impact PR
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The multi-billion dollar vehicle insurance industry will face radical decline due to the introduction of self-driving cars, with the number of crashes set to drop 80% by 2035* and insurance premiums to plummet, according to a leading car maker.
New research* shows that autonomous driving (AD) technologies could wipe USD20bn off insurance premiums globally by 2020 alone. At present, motor insurance generates 42 per cent of all non life gross premiums, the largest single slice of global premiums.**
Coby Duggan Volvo NZ national manager believes the insurance industry will have no choice but to react to these seismic challenges to its existing business model.
“The medium to long term impact on the insurance industry is likely to be significant. Autonomous driving technology is the single most important advance in automotive safety to be seen in recent years. It will mean fewer accidents, fewer injuries, fewer fatalities and fewer costs for vehicle owners,” he says.
Peter Shaw, chief executive at Thatcham Research says vehicle manufacturers are predicting that highly autonomous vehicles, capable of allowing the driver to drop ‘out of the loop’ for certain sections of their journey, will be available from around 2021.
“Without doubt, crash frequency will also dramatically reduce. We’ve already seen this with the adoption of Autonomous Emergency Braking (AEB) on many new cars. Research predicts that by 2035, as a result of autonomous and connected cars, crashes will be reduced by 80 per cent. Additionally, if a crash unfortunately can’t be avoided, then the impact speed will also drop as a result of the system’s performance - reducing the severity of the crash,” says Shaw.
Duggan says Volvo is committed to maximizing the safety benefits of AD cars. The company will start the UK’s most extensive AD trial entitled Drive Me UK in 2017, with up to 100 AD cars being driven on real roads by real people, part of its global push to develop AD cars with similar programmes to be run in Sweden and China.
“The introduction of autonomous driving represents a revolution for automotive safety. Volvo has a vision that no one will be killed or seriously injured in a new Volvo by 2020. Autonomous drive technology is a key tool in helping us achieve this aim.”