Everyone is talking about and expecting self-driving cars to be on the road by 2019. One of the side effects of self-driving cars should be less accidents. According to a study done by the accounting firm of KPMG, the coming technology of autonomous cars could bring an 80% reduction in accident frequency by 2040.
The accounting firms states this reduction in auto accidents will result in a potentially drastic reduction in loss costs and premiums. However, accident expense could go from $14,000 per accident to $35,000 as the self-driving cars have more expensive technology that can be damaged in accidents. They claim the normal insurance company business model will be flipped upside down. Autonomous cars under Google logo crossed the million-mile logged mark. In January, 2016, Apple registered the domain name Apple.Car.com. Apple expects to turn out cars by 2019. Apple has hired more engineers from 600 to 1800 for jobs related to the autonomous auto.
94% of industry survey respondents say actual policy coverage will change 52% saying property coverage will change and 71% expecting coverage to change reflecting costlier vehicle part replacement. KPMG among the same data found competition for insurance policies will “rev up”. Niche insurance companies will handle 42% of the market. New providers falling to 39% of the market and consolidation in store for 29% of the providers.
According to an article in the Westchester Business Journal by Bill Fallon on February 22, 2016, KPMG published a second report titled “marketplace of change: automobile insurance in the era of autonomous vehicles”. KPMG said “a decline in accident frequency due to safer vehicles. The adoption of autonomous vehicles could shrink the U.S. personal auto insurance section by 60% within 25 years. Self-driving cars are poised to completely transform the auto insurance industry and underlying market forces including technology enablement, consumer adoption and regulatory permission. The risk profile of vehicles is changing daily and the drop in insurance industry loss costs would reduce the size of the auto insurance market and trigger consolidation of personal line carriers, attract new competitors and force operational changes within carriers. Nearly accident free vehicles could be here before autonomous vehicles.
The result will be that commercial lines would take a larger share “as the vehicles make more decisions. The potential liability policies will increase because of sophisticated technology that underpins driverless vehicles will also need to be insured.
The personal auto line sector will likely bear the brunt of the transformation as it will hold a small share of a small market. By 2040, KPMG believes this section will cover less than $50 billion in loss costs. Compared to the current $125 billion with premiums moving proportionally down. “Many insurers don’t have a profitability cushion to erode and lack the structural agility to shed costs quickly in a changing environment”. “Traditional insurance business models will be flipped upside down and insurance company turmoil across the industry”.
It can be easily seen that the market will also shrink for personal injury lawyers.
If you or a loved one has been injured by a self-driving car, contact the Law Firm of Dominick J. Robustelli & Associates, PLLC at (914) 288-0800 or at our website of WhitePlains-Injury-Lawyer.com or on our new web name of Robustelli Personal Injury Law NY.com