We use cookies to improve this site and enable full functionality. You can change your cookie settings at any time using your browser. Our cookie policy.

Get ready for a 40% cut in premiums for this insurance line

Get ready for a 40% cut in premiums for this insurance line

Get ready for a 40% cut in premiums for this insurance line by Caitlin Bronson and Paul Lucas

Premiums for car insurance could drop more than 40% once the use of automated vehicles is fully adopted, new data from insurance broker Aon Plc. suggests. For independent brokers, experts say the shift could mean significant changes in both commission and office structure as one of the channel’s introductory products becomes less prominent. 

Paul Mang, head of analytics at Aon, spoke about the new technology at a press conference in Monte Carlo Sunday. Assuming driverless cars become the norm by 2050, Mang urged the industry to “act quickly to ensure that we have the products available to align to the new paradigm.”

“Autonomous driving clearly moves the business mix to fleet products and commercial lines,” Mang said.

The shift in liability – and in premiums – will not happen all at once, however. By 2035, Aon says auto premiums could drop 20%. It’s a similar figure to the 25% drop by 2030 anticipated by Stefan Schulz, global head of motor and property consulting at Munich Re.

Schulz suggested that while the advent of autonomous cars will make driving safer, it will also bring new risks, including hacking attacks on connected cars and rear-end collision of trucks driving in automated convoys.

Last week we told you that the Association of British Insurers was looking for clarity on the right to claim damages from driverless car makers (see Insurance industry demands legal rights on driverless cars).

The call has received widespread backing with Matthew Thomas, strategy and planning director for Ageas, commenting that it is essential that regulatory framework be put in place.

“A universal system of strict liability should be introduced,” he said. “This would ensure that drivers are protected if they’re involved in accidents - whether it’s their fault, the technology, or liability cannot be determined. Strict liability would be suitable for all new technologies being developed and is similar to the system used across continental Europe. 

“There are advantages to bringing in strict liability across all motor insurance products and it would be beneficial to make this change now, especially as the technology is developing so quickly and it can take time to bring in legislation. If it’s too challenging to introduce strict liability across the board then, as a minimum, it should be used by all ‘automated’ vehicles, whether or not they’re in automated mode. If the UK is to remain at the forefront of vehicle development and take advantage of the huge benefits that driverless technology could potentially bring, it must not unintentionally create regulatory barriers.”

BIBA meanwhile issued a statement with its own “four key priorities” that should mark the pathway to driverless cars.

“Firstly, a single seamless motor insurance policy should be developed that will provide indemnity for risks that will include failure of the autonomous vehicle however caused, including by cyber-attack,” it reads.

“Secondly, in order to support claims and insurance policy transferability it will be essential for customers and their insurance brokers to have immediate and unrestricted access to all data from the autonomous vehicle manufacturer and that the data be provided in a standard, clear, accessible format. 

“Thirdly, given the changing risks that will emerge, insurers must have clarity over their rights of subrogation against a manufacturer whose vehicle may have been at fault.  At law, manufacturers in these circumstances should not be able to use a ‘State of the Art’ defence to avoid damages.

“Fourthly the autonomous vehicle driver or user will need to have recourse under the Road Traffic Act to be able to claim on their own insurance policy to receive compensation should they sustain any injuries that are caused by a vehicle defect and sustained whilst it is in fully autonomous mode.”

Where do you stand on the issue of insurance for driverless cars? Leave a comment below with your thoughts.

Related stories:
Insurance industry demands legal rights on driverless cars