Survey Indicates That Auto Insurers Are Unprepared For Self-Driving Cars

Will auto insurers be ready for self-driving vehicles when they hit the road?

According to a study released by consulting firm KPMG, auto insurers are unprepared for the major changes that self-driving vehicles will create for their business, and most don’t think the technology will have a significant impact for at least a decade.

The survey asked executives of insurance companies with approximately $85 billion of auto insurance premiums a series of questions that were designed to measure their knowledge and opinions about autonomous vehicles. Overall, the study results show skepticism about the potential transformation that self-driving cars will bring in the near term.

According to the report, few insurance carriers have taken any action to prepare for the changes that self-driving vehicles will make to their business. As opposed to this being due to the possible ramifications of such changes, this is instead because most insurance executives believe that self-driving cars won’t hit the road until far in the future, if at all. The study found that 84 percent of executives don’t expect that autonomous vehicles will have a significant impact on their business until 2025, while 42 percent expect a significant impact to occur in 6 to 10 years. Almost three-quarters of insurers believe that they are currently unprepared for autonomous vehicles.

Another interesting survey finding is that 55 percent of respondents believe that regulators will impede the adoption of autonomous vehicles, which explains why insurance executives are predicting the effect to be far in the future. However, analysts at KPMG, as well as many technology and auto industry experts, think that these executives are wrong.

“The disruption of autonomous vehicles to the entire automotive ecosystem will be profound, and the change will happen faster than most in the insurance industry think,” said Jerry Albright, principal in KPMG’s Actuarial and Insurance Risk practice. He explained that new technologies that make cars safer are impacting underwriting practices, claim frequency and severity, as well as auto premiums.

“To remain relevant in the future, insurers must evaluate their exposure and make necessary adjustments to their business models, corporate strategy and operations,” said Albright.

Perhaps lack of knowledge is part of the problem. According to the survey, only 29 percent of executives see themselves as being highly knowledgeable about autonomous vehicles, while only 10 percent have developed a strategic plan to deal with the impact. The majority of the respondents said that they are either only in the “discussion phase” or they have done nothing to prepare, despite acknowledging an expected decline in claim frequency and premium per policy.

Although self-driving vehicles may have a long way to go in terms of technology improvements, consumer acceptance and regulatory hurdles, there are many auto industry experts who feel that they will hit our roads a lot sooner than the majority of insurance executives seem to think.

Will insurance companies be ready for self-driving cars when they hit the market?