Could the car insurance prices really fall by 60% by 2060? Autonomous Research think so, and have just produced a new report which looks at the long term effects of driverless cars on the automotive landscape we know today. ‘Driverless Cars: When the hands come off the wheel’ makes interesting reading.
Autonomous Research have gazed into their automotive crystal ball and seen the future. The huge investment being targeted at autonomous vehicles is going to pay off. Already customer interest is stimulated and before very much longer we will be seeing more and more autonomous or semi-autonomous vehicles on the roads. Tesla and Google’s vehicle offering will come to market, and traditional car manufacturers will have to offer more tech to keep pace. This is already being seen in the premium end of the market, but customers will soon want proven life saving in their own mid-range vehicles. Before we know it, advanced autonomous safety systems will be standard in all vehicles, much like air bags are now. Autonomous Research write, “Historically it takes 15 years for new technology to penetrate 95% of new car sales, a further 15 years to fully penetrate the fleet. However it could be quicker this time around given the sea change in customer experience." So, what could this mean for the lucrative car insurance industry? Could their business really shrink by more than 80 per cent, as some are predicting?
Today, car insurance policies are big business, accounting for 42 per cent of the global insurance market. Breaking it down a little, a majority of claims are caused by driver error: two thirds of accidents occur at low speeds of 30mph or lower, typical of city traffic; one third of accidents are accounted for by rear-end shunts; a quarter of all submitted insurance claims are for damage caused when parking or reversing. If these low speed, avoidable accidents can be removed from our driving experience, insurance claims will plummet. This is not beyond the realms of possibility. With autonomous or semi-autonomous tech, cars will soon be able to auto park, automatically detect obstacles and brake to avoid rear-end damage. The risk will slowly be removed from driving, saving the consumer a fortune in insurance premiums, currently running at a UK average of £357 per annum.
Cut In Claims, Cut In Price
Already, semi-autonomous tech such as adaptive cruise control and automatic braking is cutting accident rates. Insurance claims will drop from 9% to 2.4% by 2060, predicts the report, as fully autonomous cars take over, as they are likely to cut the chances of accidents occurring by as much as 36%. They see 2025 as the year when fully driverless cars will really begin to transform the premium vehicles landscape.
The Future is Bright
It’s not just the car that is going to cut accidents. Radar and Wifi roads will be trialled by the end of 2017, as part of a £150m ‘connected UK roads trial. The future looks much more accident free, which is great news for drivers – but not such good news for insurance company profits.