Study Indicates Insurance Industry Is Unprepared for Autonomous Cars
By 2020, most automakers and suppliers believe that driverless, or autonomous, cars will be readily available to the American consumer. Already, Google Inc. and Delphi Automotive Plc have successfully tested driverless cars on the roads in Silicon Valley.
The insurance industry, however, is less convinced and more skeptical, according to a study by KPMG, Automobile Insurance in the Era of Autonomous Vehicles Survey.
“As the way we drive and commute transforms, the amount, types, and purchase of automobile insurance will be impacted. The disruption to insurers may be profound, and the change could happen faster than most expect. To remain relevant in the future, insurers must evaluate their exposure and make necessary adjustments to their business models, corporate strategy, and operations,” the study stated.
Detroit car manufacturers expect that significant portions of driving will be automated by 2020, including how drivers avoid traffic jams, and on freeways, or in other highly predictable situations.
Yet when KPMG surveyed the senior executives representing $85 billion of the personal and commercial auto insurance industry, 84% said that they do not expect autonomous vehicles to significantly impact the insurance industry until 2025 – almost five years after the first wave of autonomous vehicles hits the roads in America.
KPMG indicated that the disconnect between the pending reality of driverless cars in 2020 and the readiness of insurance carriers is significant. Only 29% of those surveyed felt knowledgeable about autonomous vehicles, and even fewer, 10%, had developed a strategic plan to handle the shift that could occur in as little as five years.
“The disruption of autonomous vehicles to the entire automotive ecosystem will be profound, and the change will happen faster than most in the insurance industry think,” said Jerry Albright, a principal in KPMG’s Actuarial and Insurance Risk practice. “Technology is making cars safer, impacting underwriting practices, claim frequency and severity as well as auto premiums. To remain relevant in the future, insurers must evaluate their exposure and make necessary adjustments to their business models, corporate strategy and operations.”
Beyond Insurance suggests watching the autonomous car trend closely and monitoring the players in the provider space.