Allstate admits driverless cars could gut the company

Allstate admits driverless cars could gut the company

Allstate admits driverless cars could gut the company One of the nation’s leading auto insurance providers has admitted it doesn’t know how it would survive a widespread proliferation of driverless cars.

In its 2015 annual report, filed Friday, Allstate addressed increased interest in both telematics and autonomous vehicles with caution.

“Telematics devices used have been identified as a potential means for an unauthorized person to connect with a vehicle’s computer system resulting in theft or damage, which could affect our ability to successfully use these technologies,” the carrier said in its report. “Other potential technological changes, such as driverless cars or technologies that facilitate ride or home sharing, could disrupt the demand for our products from current customers, create coverage issues or impact the frequency or severity of losses, and we may not be able to respond effectively.”

The company’s 2014 report expressed no such reservations. In fact, Allstate Chief Executive told shareholders that autonomous vehicles and other emerging technology actually represented a “tremendous opportunity” for Allstate, given its “market position, customer relationships, capabilities and financial resources.”

Driverless cars are still few in number – and relatively high in accident rates – but the technology is rapidly advancing, and many analysts predict the technology will be seen on the roads in large numbers by 2025.

The auto insurance industry, unsurprisingly, stands to lose greatly.

Yet few carriers have taken action to adjust their business models, a late 2015 survey from KPMG shows.

The report found few carriers had taken action, but not because they doubted the possible ramifications, but because most believe the change will happen far into the future, if at all.

It found 84% of executives don’t expect autonomous vehicles to have a significant impact on their businesses until 2025 while 42% expect a significant impact in 6-10 years.

Many executives also believed the government would slow the introduction of autonomous vehicles, which KPMG says may explain why the insurance executives see a more distant effect on their business.

However, the views were not in line with KPMG’s own stance, with the report’s authors stating that change would happen faster than most in the insurance industry think.

“No one has a crystal ball that can predict the future, but we are convinced that a period of unprecedented change has begun,” Jerry Albright, principal in KPMG’s Actuarial and Insurance Risk practice said.

“The disruption of autonomous vehicles to the entire automotive ecosystem will be profound.”
6 Comments
  • mike a 2/25/2016 1:10:07 PM
    even the "jetsons" controlled their space vehicles. This isn't auto pilot on a plane we are talking about. If I am going to get killed in an auto accident its going to be while I had my hands on the wheel, not because I was depending on a computer chip to break for me, steer for me etc.Not to mention what the overall cost for these vehicles may be and who can afford them? Regardless, at the end of the day their still will be accidents and a need for insurance...regardless of the technology. If anything if the technology creates less accidents premiums should lower and companies will be more willing to take on more risk.
    Post a reply
  • John Auer 2/25/2016 2:28:48 PM
    I think insurance executives have got their heads in the sand. People will adopt self driving cars quicker than they took to smart phones.
    Post a reply
  • Jon a 2/25/2016 3:25:56 PM
    Sensors and cameras alone are a great advancement in auto technology. Yet they have contributed to increased premium costs. When you park at the shopping center and come out to see your state of the art bumber, bumped how much will it cost someone to not only fix the bumper but all the electronics that go with it.

    how much worse will these costs be when cars actually drive for you?

    I think what Mr Wilson was actually driving at, wasn't that demand for insurance was going to dry up, rather he doesn't know how dramatically it will cause costs to increase.
    Post a reply