Autonomous transition could lower fleet premium

As autonomous vehicle technology continues to improve and accident rates declines, policyholders could face the prospect of lower auto fleet insurance premiums, according to Moody’s Investors Service.

“As advanced autonomous vehicles become prevalent, accident frequency is likely to fall precipitously over time, and could ultimately translate into significantly lower loss costs and premiums for auto insurers,” said a new report on autonomous vehicles.

However, the report also suggested that profits are likely to also decline, as most insurers set profit targets as a percentage of premiums.

Auto liability could also shift, the report added: “Regulators, lawmakers and courts will have to determine how liabilities for accidents caused by autonomous vehicles are shared among automobile manufacturers, technology companies, drivers, and their insurers.”

“Some, albeit smaller, demand for specific auto-related insurance coverages such as product liability for automakers could remain.”

The Moody’s report comes at a pivotal point for motor insurance. Insurers were told earlier this month that they have a huge role to play in the implementation in the use of autonomous vehicles, which are set to turn global transport systems “upside down”.

Speaking at Lloyd’s, Paul Newman, founder and CTO of autonomous vehicle software company, Oxboticia said the future of transport would change and insurance would be a key part of driving that change.

“Autonomy and insurance come together,” he said. “Insurance is everywhere, because of everything, and so is autonomy.” Newman added that autonomy will “upturn” transportation.

“We view it as the movement of atoms,” he added. “Be it cucumber atoms, via Ocado, or child atoms to school. The process of transportation has not changed since the pony and cart,” Newman continued. “It has major flaws. The first is it requires one operator per vehicle. We have yet to figure out how we remove the operators out of the vehicle.

“In the future the operators will be able to operate N vehicles. It will be down to the insurance industry to decide what number N is.”