Re-Rethinking the End of Auto Insurance

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12 August 2019


Seven years ago, in May 2012, Celent did some thinking about: “What happens when there are (almost) no auto accidents?” Celent concluded:

  • "This scenario is plausible, and that the probability of [a substantial reduction in auto insurance premium] occurring is sufficiently high that auto insurers should devote some resources to considering the scenario and its implications for their business model and enterprise.”

Three years ago, in June 2016, Celent did some rethinking of its earlier report. It published an update, taking advantage of the intervening four years, to revisit the impact of three technologies on auto insurance losses: telematics, ADAS (advanced driver assistance systems), and autonomous cars. That report, The End of Auto Insurance: A Scenario or a Prediction?, expressed more confidence in its conclusions and recommendations:

  • "During the next 15 years, auto insurers will likely see their business shrink (and continue to shrink thereafter as driverless cars become a larger part of the fleet). Some insurers are beginning to address this existential challenge now. The rest will have to do so in a few years.”

Since 2016, events have moved rapidly—though not all in the same direction.

  • In 2016, some automobile manufacturers predicted they would have fully autonomous vehicles available to consumers in or around 2020. In 2019, few, if any, manufacturers are now making that claim.
  • Since 2016, the number of acquisitions, investments, and alliances among automobile manufacturers’ autonomous vehicle development efforts have multiplied. This suggests that very few manufacturers believe they can develop and deploy autonomous vehicles without very large combined resources.

The likely impact of autonomous vehicles on the auto insurance market has decreased. The potential impact of two other technologies has grown:

  • Telematics
  • ADAS

This report examines each of these factors and concludes by re-rethinking Celent’s outlook on the end of auto insurance.