The biggest insurance companies in Britain have teamed up to respond to the rise of autonomous cars, as the new technology threatens to turn their industry on its head.
Admiral, Aviva and Direct Line are among 11 companies which have formed a group that plans to represent the industry as the government prepares to introduce driverless cars to the roads.
Driverless vehicles are expected to dramatically reduce accidents, cutting insurance premiums by up to 80 per cent in 25 years’ time, leading to a major nosedive in profits for insurance companies.
As well as this, the new technologies are already starting to shift accident liability from drivers to vehicle manufacturers, meaning the entire industry’s operation have to be completely restructured.
The new group, the Automated Driving Insurance Group, will aim to present a united front for insurers as government ministers prepare new laws for the operation of autonomous cars.
Examining how the industry should respond to the new technology, the Group will also provide advice on how best to insure and regulate fleets of robotic, driverless vehicles.
Premiums could drop, but also profits
Thatcham Research, the insurance industry’s research wing, has estimated that premiums could fall as much as 50 per cent by 2025 and up to 80 per cent by 2040 as safety improves.
While it’s good news for motorists, shrinking revenues could leave the traditional insurance industry in tatters, forcing companies to re-evaluate their business models in an effort to adapt.
The government has pledged to amend motoring laws by 2018 to account for the rise of driverless or semi-autonomous cars, which are expected to be fully integrated on British roads by 2020.
James Dalton, director of general insurance policy at the Association of British Insurers, said: “Contrary to what some people might expect, insurers are not standing in the way of this development but actively looking to support progress and innovation.
“The role of motor insurance in such a future will be very different to what it is today, but insurance will be part of the picture.”
