Random Thoughts: Driverless Cars

Share this post:

Only one thought today. Two weeks ago, the econoblogsphere – which I tend to follow when time permits – gained a fabulous participant: the Bank of England launched their blog, Bank Underground.[1] Even better, their second post was on a hot insurance topic: driverless cars, which the BoE thinks will have a massive impact on the industry.

A switch to driverless cars […]  is a double edged sword for UK insurers who underwrote around £8bn in private motor insurance premiums last year. What they could save in falling claims costs and frequency, they stand to lose in shrinking premiums – one estimate being as much as 50% by 2025 and 80% by 2040 according to Thatcham Research.

When I present on “Insurance of the Future”, one of my favorite leads is the question “in (insert future year here), will cars need insurance?” We generally tend to agree that some kind of insurance is needed – it still poses a risk after all – but not in the same way as currently. The BoE echoes that: motor insurers will have to look for their revenue in other kinds of service.

There’s really not much I can add to the post – so here is the link.



[1] Which means we don’t have to wait until Mark Carney retires, unlike with Ben Bernanke Winking smile

Insurance Leader, IBM Institute for Business Value

More InsurTech stories

To energize innovation in financial services, take it outside

Financial companies have always been innovators. But in this age of digital transformation, innovation in financial services is more important than ever to stay competitive. Innovation processes, traditionally limited to product development, are now spreading throughout the entire organization. Many companies, however, are not yet well-positioned to reap the benefits. When researchers from the IESE […]

Continue reading

Four ways to stem the growth of financial crime in insurance

Insurers have long understood that the ability to quickly detect fraudulent claims not only stems losses, but also minimizes the impact to legitimate customers as well. But as more complex financial crimes like money laundering, employee fraud, and corruption have gravitated toward insurers more recently, many don’t have the programs in place to combat these […]

Continue reading

How can insurers stay relevant when insurance ceases to be mandatory?

Insurance and insurers have been around for millennia, with modern insurance starting in the U.K. more than 300 years ago. For much of this time, incumbent insurers have been protected from competition by four big barriers: regulation, the law of large numbers, the trust nature of insurance, and, last but not least, the inertia of […]

Continue reading