Multi-billion pound UK motor insurance industry faces radical restructuring due to autonomous cars
The multi-billion pound UK motor insurance industry faces a period of radical restructuring as a result of the advent of autonomous cars – with the number of crashes said to drop by 80 per cent by 20351 and insurance premiums set to plummet – a high level panel discussion organized by Volvo Cars and Thatcham Research heard in London on May 3rd.
Research by Swiss Re and HERE2 released earlier in April calculated that autonomous driving (AD) technologies could wipe USD20bn off insurance premiums globally by 2020 alone. At present, vehicle insurance generates 42 per cent of all non-life gross premiums, the largest single slice of global premiums, according to the report.
Volvo Cars believes that the insurance industry will have no choice but to react to these seismic challenges to its existing business model.
“The medium-to-long-term impact on the insurance industry is likely to be significant. But let’s not forget the real reason for this – fewer accidents, fewer injuries, fewer fatalities. Autonomous driving technology is the single most important advance in automotive safety to be seen in recent years,” Håkan Samuelsson, president and chief executive at Volvo Cars told a seminar held in London entitled ‘A Future with Autonomous Driving Cars – Implications for the Insurance Industry’”.
Peter Shaw, chief executive at Thatcham Research, said: “Vehicle manufacturers are predicting that highly autonomous vehicles, capable of allowing the driver to drop ‘out of the loop’ for certain sections of their journey, will be available from around 2021. Without doubt, crash frequency will also dramatically reduce. We’ve already seen this with the adoption of Autonomous Emergency Braking (AEB) on many new cars. Research in the US by NHTSA predicts that by 2035, as a result of autonomous and connected cars, crashes will be reduced by 80 per cent. Additionally, if a crash unfortunately can’t be avoided, then the impact speed will also drop as a result of the system’s performance – reducing the severity of the crash.”
Volvo Cars is fully committed to maximizing the safety benefits of AD cars. It announced last week that it will start the UK’s most extensive AD trial in 2017, with up to 100 AD cars being driven on real roads by real people, as part of its global push to develop AD cars with similar programmes to be run in Sweden and China.
“The automotive industry cannot do this on its own,” said Samuelsson. “We need governmental help. It is essential that carmakers work with governments to put laws and regulations in place that allow us to get these cars on the road as soon as possible and start saving lives.”
Sajid Javid, UK Secretary of State for Business, Innovation and Skills, said: “Driverless cars will see our journeys become faster, cleaner and safer. The UK is leading the way in developing the technology needed to make this a reality thanks to our world-class research base and these types of trials will become increasingly common.
“Such advances in technology prove the fourth industrial revolution is just around the corner and our determination to be at the forefront is why we are attracting top names from across the globe for real-world testing.”
Samuelsson also said that he looks forward to working with the UK government to ensure that this technology can be introduced as soon as possible.
“The advent of autonomous driving represents a revolution for automotive safety,” concluded Samuelsson. “Volvo has a vision that no one will be killed or seriously injured in a new Volvo by 2020. Autonomous driving technology is a key tool in helping us achieve this goal.”