Premiums for US auto insurers could drop more than 40% once the use of automated vehicles is fully adopted, new data from insurance broker
Aon Plc. suggests. For independent agencies, experts say the shift could mean significant changes in both commission and officse 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 premium – 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.
The bulk of personal liability, however, will be removed from auto risk and individual coverage will likely respond to simple property threats – something that could easily be sold by non-traditional partners.
“For example, insurers could…partner with credit card companies to offer ridesharing insurance coverage as a part of a core or premium service,” analyst firm Deloitte said in its June report, “Future of Mobility.”
That leaves insurance agencies with a good deal to rethink in terms of how they train new producers and how they approach cross-selling opportunities, said John Matley, a member of Deloitte’s Future of Mobility initiative.
“If auto liability is more of a commercial product going forward, it will potentially impact agents and the distribution force in general,” Matley told
Insurance Business America. “The reality is that as distribution evolves, potentially homeowners becomes a lead line instead of auto – especially if we’re looking to reduce the frequency and severity of losses in auto.”
Agencies should also work to strengthen their commercial relationships, as they will be better prepared to serve the new market for auto liability insurance than those whose primary focus is on the individual owner.
Deloitte believes that while agencies will continue to be the primary distributor for insurance for personally owned autonomous vehicles, these changes in strategy will be critical to their continued integrity in the industry.
“Notwithstanding the potential narrowing of traditional channels, shared mobility and autonomous vehicles create fresh opportunities for the sale and distribution of auto insurance,” the paper said.
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