According to a new study from one of the world’s leading financial advisory partnerships, the majority of UK insurers are completely unprepared for the arrival of driverless vehicles.
The Autonomous Vehicle Insurer report from KPMG canvassed the views of senior executives from many of the UK’s largest insurers and brokers on the impact driverless vehicles will have on their business. Despite acknowledging that driverless vehicles will touch every area of their business model, only one in 10 insurers (10%) have developed strategic plans to help their business navigate this change. Furthermore, just a third of insurers (32.5%) have held internal or external discussions around driverless vehicles and four out of 10 (42%) said they are not making strategic investments in their business model to prepare for the arrival of this new technology.
Insurers’ apathy toward driverless vehicles would appear to be driven by the assumption that they have ample time to prepare their business before the technology becomes mainstream. A third of insurers (33%) believe it will take at least 10 years for driverless vehicles to significantly impact the automotive sector, while the majority (67%) said it would take at least two decades. Insurers highlighted consumer acceptance and safety standards as issues that need to be resolved before the UK sees mass adoption of driverless vehicles. However, once the technology becomes mainstream, the majority of insurers (89%) believe that claims frequency and severity will decrease as a result. The study was based on responses from 18 senior leaders representing many of the UK’s largest insurance companies and brokers. Collectively, respondent companies represent 50% of the total UK motor insurance market measured by turnover based on gross written premiums.
“We are surprised that many insurers have been slow to react to the current technological changes taking place in the automotive sector,” commented Murray Raisbeck, insurance partner at KPMG. “Driverless vehicle technology will radically change the insurance market, and in our view disruption will happen faster than most insurers think. Insurers need to overcome their apathy toward driverless vehicles. There are clear opportunities to develop new income streams for those firms that are prepared to step out of the pack and embrace the changes taking place in the sector. Firms should model a range of scenarios around the impact autonomous vehicles will have on the market and their own business. This will help them to identify the products that will resonate with their customers, and to establish how and when these products can be developed.”