Aon report shows fear for insurance industry in a driverless car future

12 Sep 2016

A new report issued by Aon confirms fears of a driverless car future where car insurance isn’t needed, impacting the cost of our home insurance.

Aon’s annually released Global Insurance Market Opportunities (GIMO) report attempts to examine the key areas of potential growth and disruption for insurers in the years to come. In this case, it looks at how driverless cars will likely harm their profit margins.

Entitled Riding the Innovation Wave, the report estimates that, with autonomous vehicles set to begin hitting the road properly in 2018, there will be an 81pc reduction in claims frequency in the following decades in the US.

With nearly half of all global premium insurance accounts focused on car insurance, the report warns that property insurance volatility could increase by as much as 40pc in the coming years with such a massive reduction in capital.

As one of the world’s largest insurers, Aon is understandably nervous of such a future taking shape.

“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,” said Paul Mang, CEO of Aon Analytics.

“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.”

Cybercrime will make up lost revenue

Aon does see opportunities ahead too, however, with growth in cybercrime pushing up premiums related to information security.

By 2020, Aon predicts that cybercrime premiums could reach as much as $10bn and that, by the same time, the economic effect of cybercrime will grow to $3trn.

When discussing other potentially disruptive forces within the industry, Aon described how, in 2015, over $2.6bn was invested in 200 insurance start-ups and major players in the industry are being left behind.

“Venture capitalists are not interested in our industry in its current form,” Mang said. “They are aiming to reorganise our processes and operations in order that they can create new economic opportunities for themselves.”

Mercedes Benz concept autonomous car image via VanderWolf images/Shutterstock

Colm Gorey was a senior journalist with Silicon Republic