Self-driving or driverless cars will have a negative impact on the UK motor insurance industry as the next generation cars promise fewer accidents. According to US government research, there could be an 80% decline in car crashes over the next 20 years because of these "autonomous vehicles".
Håkan Samuelsson, chief executive at Volvo Cars said: "The 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. Autonomous driving cars are the single most important advance in automotive safety to be seen in recent years."
Existing technologies which aid drivers such as automatic braking, are known to have already reduced both the number of accidents and their seriousness. Data from Here, a multi-faceted business in the provision of mapping data and Swiss Re, the Switzerland-based wholesale provider of reinsurance, forecasts a $20bn decline in insurance premiums by 2020 across the world as the self-driving technology becomes more widespread.
The warning by Volvo follows the company announcing last month that it would start testing self-driving cars in London in 2017. The test project will be called Drive Me London and will be done in association with Thatcham Research.
However, the Association of British Insurers (ABI), a trade association made up of 250 insurance companies in the UK which accounts for 90% of the UK insurance market is not fighting self-driving cars. It is instead welcoming the new technology.
James Dalton, director of general insurance policy at ABI said: "There will always be a need for insurance and our industry is used to adapting as new risks emerge and others fade. The potential prize here is a massive reduction in road accidents, leading to fewer people killed and injured on our roads. Insurers would love to see that become a reality."
Dalton warned that insurers will not be the only ones to be affected. Car manufacturers too would be required to prepare themselves for changes from self-driving cars. "Automated driving will send shockwaves through many industries. Motor manufacturers are facing threats to their own business models from technology giants such as Google and Apple and need to move fast to keep up," Dalton explained.