The adoption of driverless vehicles could see up to three in five motor insurance premiums vanish worldwide, a study by global law firm Kennedys has suggested.
Following discussions with industry leaders, it was found that most expect fewer accidents due to autonomous vehicles, resulting in lower insurance payouts and less premiums.
The consensus is that insurers are likely to switch focus from the general public, and instead look to provide product liability cover for manufacturers and software providers.
However, repair costs may still be high due to the ever-increasing sophistication of the technology, while manufacturers could often be the only ones able to conduct servicing.
Kennedys’ head of liability and innovation, Richard West, said that the rapid development of autonomous vehicles is likely to have a “profound impact” on the insurance industry.
“Insurers will be faced with strategic challenges in continuing to support the classic model towards new risk models in which the liability moves towards product manufacturers.
“We are likely to witness a move away from annual renewals towards on-the-go insurance and more transactional relationships where less is understood about the risk profiles of individual drivers.”
The study included a poll of over 6,000 people in the UK, US, Australia, China, Hong Kong and Singapore.
Despite driverless vehicles potentially eradicating premiums, it was found that the majority of consumers are still uncomfortable with technology, particularly in Britain.
Just 26% of UK respondents said they were comfortable with owning their own driverless car, rising to 28% in both the US and Australia.
Most support was observed in Asia, with 66% of Chinese respondents saying they would be comfortable with their own driverless car, compared with 35% of Singaporeans.
“Insurers will need to invest in understanding relationships between consumers, manufacturers and insurers and what this means for how people buy insurance,” said Kennedys’ head of corporate and public affairs, Deborah Newberry.
“Public perception of liability considerations is central to that understanding, as is hacking and privacy.”
Image credit | iStock
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