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On Autopilot: Insuring the Future of Self-Driving Cars.

Issued at 2013-11-13



Self-driving cars will soon become a reality and consequently, insurance leaders need to think through the implications that these automobiles will have for their industry. Learn why traditional premium-based revenue will probably decline, why the responsibility for accident liability could shift toward OEMs, and how this disruption could present new opportunities for companies positioned to capture them.

Within a decade or so, the first truly autonomous cars will be on the road. When that happens, the automobile insurance industry will face a major business model disruption that could drive premiums lower and change the fundamental nature of the business.

But insurers are not the only stakeholders that self-driving cars could catch off-guard. As with many disruptive technologies, lawmakers and regulators often need to play catch-up as well. For example, only three US states - Nevada, Florida, and California - have introduced regulations to allow self-driving cars on the road.

The anticipated arrival of self-driving cars will cause significant disruptions among property and casualty insurers. Based upon a McKinsey & Company analysis, four outcomes are likely: accident frequency will decline, but their severity will increase; car usage and ownership patterns will change; accident liability will shift toward the OEM; and insurance underwriting and product models will change.

Carriers can adopt a mix of defensive and offensive strategies to deal with the coming disruptions that will be generated by autonomous cars. Defensively, the goal is to extract additional value from the shrinking automotive insurance premium pool. Carriers can also go on the attack with an eye toward expanding beyond traditional automotive insurance products.


Source: mckinsey



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