• Just 10 per cent of insurers have strategic plans in place for the arrival of driverless vehicles
• Most insurers believe it will be up to 20 years before driverless vehicles become mainstream
• Insurers say safety and consumer acceptance are barriers to mainstream adoption
• Almost 90 per cent of insurers believe autonomous vehicles will reduce claims frequency and severity
• Insurers need to act now and embrace the new technology, says KPMG
The majority of insurers are completely unprepared for the arrival of driverless vehicles, according to a new study from KPMG.
The Autonomous Vehicle Insurer report 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 per cent) have developed strategic plans to help their business navigate this change.
Furthermore, just a third of insurers (32.5 per cent) have held internal or external discussions around driverless vehicles and four out of 10 (42 per cent) said they are not making strategic investments in their business model to prepare for the arrival of this new technology.
Murray Raisbeck, Insurance Partner at KPMG, said: “We are surprised that many insurers have been slow to react to the current technological changes taking place in the automotive sector. Driverless vehicle technology will radically change the insurance market and in our view disruption will happen faster than most insurers think.”
Insurers’ apathy towards driverless vehicles would appear to be driven by the assumption that they have ample time to prepare their business before this technology becomes mainstream.
A third of insurers (33 per cent) believe that it will take at least 10 years for driverless vehicles to significantly impact the automotive sector, while the majority (67 per cent) 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 this technology becomes mainstream the majority of insurers (89 per cent) believe that claims frequency and severity will decrease as a result.
Raisbeck added: “Insurers need to overcome their apathy towards 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."
Notes to editors:
The study is based on responses from 18 senior leaders representing many of the UK’s largest insurance companies and brokers. Collectively respondent companies represent 50 per cent of the total UK motor insurance market measured by turnover (gross written premium).
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KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 12,000 partners and staff. The UK firm recorded a revenue of £1.96 billion in the year ended September 2015. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 174,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.