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Self-Driving Cars Could Dramatically Change Insurance Industry, Report Says

It’s been widely publicized that self-driving cars will significantly reduce the number of traffic accidents on North American roads. But a new report suggests that this positive trend could also have a dramatic impact on the future of car insurance.

The report, which comes from international consulting firm Ptolemus, indicates that by the year 2030 there will be nearly 400 million semi or completely autonomous vehicles on the road. It’s expected that this will reduce the number of traffic accidents by roughly one-third.

The result on the automotive insurance industry could be huge. Ptolemus suggests it could lead to a 30% decline in automotive insurance premiums, drastically reducing total revenue for major insurers. In turn, that could cause many insurance companies to fold, with others being gobbled up by larger insurance providers.

In the end, Ptolemus suggests, it could result in the car insurance market shrinking by about 40% in just over ten years’ time.

Frederic Bruneteau, a managing director at Ptolemus, says insurance companies need to adapt if they hope to survive. “The emergence of autonomous vehicles may appear as a remote risk today,” said Bruneteau. “However, this is a collision insurance companies must face and the magnitude of its impact is extremely high.”

Many insurance companies are fully aware of the situation. To better handle future threats, some are banding together – in the United Kingdom, more than a dozen insurers, including Aviva, have joined to form the ABI.

“Developments in autonomous driving are increasingly being seen in new cars – from autonomous braking to self-parking,” an Aviva spokesperson said. “Insurance is a key part of these developments and it’s important that insurers work together to understand the impacts.”

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