U.S. insurance premiums could be reduced by more than 40% by 2050 due to autonomous vehicle technology, according to a report from Aon Benfield, a global reinsurance intermediary and capital advisor.
Personal motors account for 47% of the global insurance premium and with the implementation of autonomous technology that reduces accident frequency and severity, insurance premiums will go down.
Aon’s Global Insurance Market Opportunities (GIMO) report revealed that even if autonomous vehicles are adopted at a moderate pace, insurance premiums could be reduced by 20% by 2035 and more than 40% by 2050 compared to 2015 levels.
Aon predicts an 81% reduction in claim frequency, but also predicts an increase in claims severity due to the cost of sensors and product handling liability.
“Adoption of autonomous vehicles will of course be affected by many variables such as regulatory challenges, cost to the consumer, safety, vehicle ownership preferences, and the technology itself,” Paul Mang, CEO of Aon Analytics, said. “However, we as an industry need to act quickly to ensure that we have the products available to align to the new paradigm; if we fail to do so, we only invite disruption.”