Good news for you, but not for the insurance market
AS autonomous driving technology advances, says an article in The New York Times signed by BENJAMIN PRESTON and posted in the site of the newspaper, perhaps the most notable benefit is the promise of a striking reduction in accidents.
But fewer accidents will, according to a recent report, turn the entire auto insurance industry on its head.
At Progressive’s investor relations meeting in 2013, John Curtiss, the company’s auto products development chief, said the industry had grown 90 percent over the previous 30 years, mostly because more vehicles were on the road.
At risk is the lifeblood of the industry — $200 billion in premiums that the insurers collect every year from policyholders. According to a KPMG’s report, the insurance industry could contract by as much as 60 percent by 2040 as accident damage payouts and premiums fall.
Even Warren E. Buffett, whose Berkshire Hathaway conglomerate owns Geico, has said that widespread adoption of autonomous technology poses “a real threat” to the industry.
“This technology will be disruptive to the insurance industry,” Mr. Albright said. “There will be winners, and there will be losers. There will be fewer companies than there are today. But the question is, Who will survive?”
It could even result in fewer cars for companies to insure. A recent report from Barclays Capital said that autonomous technology would lead to a 40 percent decline in sales and a 60 percent drop in the number of cars on the road.
Already, the changes are happening. Devices like automatic braking, adaptive cruise control (it adjusts the car’s speed to match that of the traffic ahead) and sensors that automatically keep the car from drifting outside a lane are available. And this does not include the fully autonomous cars that companies like Google and automakers have been testing for years.
Insurance companies have, accordingly, been examining potential changes to the current business model.