Could the broad adoption of currently available technologies result in a radical reduction in the auto insurance business? This report presents a scenario showing how it might happen.
A new report, A Scenario: The End of Auto Insurance: What Happens When There Are (Almost) No Accidents, describes a provocative but plausible scenario in which federal and local government in the US encourage the use of three currently available technologies (telematics, collision avoidance, automated traffic law enforcement) and one emerging technology (robot cars). The net effect is to substantially reduce traffic accidents and insured automobile losses. Consequently, property/casualty insurers see a major reduction in their auto insurance premiums revenue.
“In the near term, an auto insurer should be asking itself three questions,” says Donald Light, Senior Analyst with Celent’s Insurance group and author of the report. “First, how is it monitoring technology-driven changes in insured losses, (i.e., the progress of the scenario)? Second, do scenario technologies provide new kinds of data and analytics-driven changes in pricing, underwriting, etc.? And third, what should it do differently this year and next?”
“In the longer term, insurers with a significant amount of auto business have to grapple with some very challenging enterprise strategy issues,” he adds.
