Motor insurance industry to face radical restructuring due to autonomous cars
Volvo president and chief executive Håkan Samuelsson has said that the introduction of autonomous vehicles will represent the most important advance in automotive safety to be seen in recent years.
Research by Swiss Re and Here reveal that autonomous vehicle technology will reduce the number of accidents by 80% and could wipe $20bn off insurance premiums globally by 2020 alone.
Motor insurance currently generates 42% of all non-life gross premiums, the single largest slice of global premiums.
Volvo said that the insurance industry must brace itself to the coming seismic changes to the existing business model.
Volvo president and CEO Hakan Samuelsson says: "The medium to long term impact on the insurance industry is likely to be significant. But let's not forget the real reason for this - fewer accidents, fewer injuries, fewer fatalities."
Thatcham Research CEO Peter Shaw said: "Vehicle manufacturers are predicting that highly autonomous vehicles, capable of allowing the driver to drop 'out of the loop' for certain sections of their journey, will be available from around 2021.
"Without doubt, crash frequency will also dramatically reduce. We've already seen this with the adoption of Autonomous Emergency Braking (AEB) on many new cars.
"Research in the US by NHTSA predicts that by 2035, as a result of autonomous and connected cars, crashes will be reduced by 80 per cent.
"Additionally, if a crash unfortunately can't be avoided, then the impact speed will also drop as a result of the system's performance - reducing the severity of the crash."
Volvo recently announced that it will deploy about 100 cars in the UK for autonomous vehicle testing. The trial is set to being in early 2017.
The trial will include real people sitting inside autonomous vehicles and on real roads. Volvo has similar plans to test its autonomous vehicles in Sweden and China as well.