The motor insurance sector is set to be completely transformed by the widespread adoption of autonomous vehicles, according to a new report from Fitch Ratings.
The ratings agency has published an assessment of the challenges autonomous vehicles pose for insurers – Driverless Cars to Transform Motor Insurance – setting out the ways in which they are likely to impact traditional insurance models.
Fitch forecasts that this long-term transformation will come about as a result of liability shifting towards vehicle manufacturers, and the traditional risk pool shrinking if shared driverless fleets lead to a reduction in individual car ownership.
The agency expects the transition to take many years. It warns that insurers will be forced to diversify their business models and that some may disappear if they fail to adapt to a driverless future.
However, the arrival of autonomous vehicles may also provide new opportunities for insurers, predicts Fitch – for example, being able to harness an increase in data to price risk more accurately.
In the shorter term, says the agency, insurers are likely to see a fall in the frequency of claims as semi-autonomous driver aids, such as emergency braking systems, help to limit crashes.
The debate over driverless vehicle insurance and liability is a critical one for the industry as it plans for the arrival of autonomous cars.
The UK Government has recently introduced draft legislation to Parliament – the Vehicle Technology and Aviation Bill – that sets out new insurance rules covering self-driving cars. The bill had its first formal parliamentary debate on Monday.
To support the successful introduction of automated technologies to the UK's roads, the Association of British Insurers this week stressed the importance of having clear driverless definitions to establish which vehicles can safely be used in autonomous mode.