Self-Driving Cars May Cut U.S. Insurance Claims 90% by 2050
Equipping cars to drive themselves could slash the frequency of crashes by 90% and reduce annual insurance payouts 71% (about $137 billion per year) by 2050, says KPMG LLP.
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Equipping cars to drive themselves could slash the frequency of crashes by 90% and reduce annual insurance payouts 71% (about $137 billion per year) by 2050, says KPMG LLP.
Such technology also will help reduce the severity of crashes and the amount of damage they inflict when they do occur, says The Chaotic Middle, a new white paper by KPMG’s insurance task force.
Those societal benefits could cause personal liability losses to plummet 93%. The drop would seriously disrupt current business models for U.S. insurers by shrinking their annual volume of personal liability premiums collected from $164 billion currently to a mere $12 billion.
More than half of overall losses also could shift from personal to product liability as self-driving technology become prevalent. The report reasons that drivers will continue to be responsible when they are piloting their vehicles. But the manufacturer would become liable if a crash occurs when the car or a robotic shuttle is in autonomous mode.
KPMG says the shift to autonomous vehicles will move into high gear by 2025 and become the norm by 2035, five years sooner than it predicted 18 months ago. The report warns of a “chaotic middle” over the next 10-15 years, during which the market will undergo a triad of disruptors: technology, competition and new mobility options that will throw almost every aspect of the insurance industry into flux.
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