Traditional insurance is in for a shakeup from the increased adoption of artificial intelligence, autonomous vehicles and other technologies - however, the future of car insurance may not be as bleak as painted by Warren Buffett during a Berkshire Hathaway briefing.
The Berkshire chief executive said that these technologies threaten the current business model, especially of its direct to consumer brand Geico insurance because it means fewer drivers, and thus fewer opportunities for insurance.
However, John Cusano, global head of insurance for Accenture, told business publication Fortune
that the emergence of these technologies in the auto space will only set off an evolution of risk, and therefore products to cover these risks. Furthermore, Accenture said in a report that the car insurance industry is projected to earn $81 billion in new revenue between 2020 and 2025.
While Buffett may be on-point about autonomous cars cutting the market for driver insurance, Accenture noted in the same report that liability in auto insurance will shift to product liability and cybersecurity, as in the case of faulty AI products or stolen personal information from the cars.
“Obviously, the ones who will be most challenged will be those on the retail side of the business since the new risks are on the commercial side. Retail insurers will have to transform their business along the way,” Cusano told Fortune.
journalist Jeff John Roberts went on to write, “This suggests the likes of Geico will indeed face pressure but that they still have time to adapt and grab a share of the commercial market.”
The report also added that manufacturers like Google and Tesla could prove to be a dark horse in the race to gain market share in the auto insurance business. Tesla could expand its foray into insurance as it becomes more familiar with the market, while Google has an advantage because its business model could allow it to utilize troves of data from its driverless cars to help it compete in the market.
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