Autonomous vehicles could potentially improve insurers' financial gains, according to Bank of America.
The impact of autonomous vehicles on the insurance industry has been a topic of much discussion, particularly after high-profile deaths stemming from the technology. However, recent data suggests that the benefits of autonomous driving in reducing insurance costs may not be as significant as initially thought.
According to analysts at Bank of America Corp., the shift to autonomous vehicles could be a potential goldmine for the auto insurance industry. With autonomous vehicles, liability will have to shift from personal to commercial carriers. This shift could remove one of the impediments to insurer profitability, as the personal lines industry might be pleased to offload some of the risks posed by the US tort system.
However, the frequency of car accidents has shown consistent improvement for over a century, but the pace of improvement has notably slowed in the past 2-3 decades. Despite technological advances, the severity of car accidents has increased at a pace exceeding any benefits from the reduction in incidents. This could mean that the anticipated cost savings may not materialise as expected.
Auto insurers typically lose money on liability protection. The analysts suggested that auto carriers would process claims and subrogate payments to newly liable commercial insurance parties. Moving the onus to carmakers and software engineers would be financially beneficial for auto insurers.
Investors are concerned about liability when driverless cars become more mainstream. Under the current US system, the driver is responsible in the event of an accident. However, as autonomous vehicles become more prevalent, it is unclear who will bear the responsibility and the associated costs in the event of an accident.
Despite the uncertainties, the autonomous vehicle landscape is evolving rapidly. Companies like Tesla Inc. and Alphabet Inc.'s Waymo are already operating driverless taxis. Honda has entered into a self-driving software deal with a Silicon Valley startup, indicating a growing interest in the technology.
The name of the analyst at Bank of America Corp. who investigated the potential of the shift to autonomous vehicle technology for the auto insurance industry is not found in the provided search results. Nonetheless, the analysis provides food for thought for both the insurance and automotive industries as they navigate the transition to autonomous vehicles.
Read also:
- Munich Airport Unveils Its New Electrical Vehicle Charging Parksite
- Clean Energy Facilities by Constellation Offer Close-to-Impeccable Summer Stability, Reinforced by $7 Billion in Capital Infusions Over the Past 10 Years
- Vehicle electrification and bidirectional charging technologies could potentially reduce EU energy expenses by a staggering €22 billion annually by the year 2040.
- Automobile manufacturer IM Motors reveals an extended-range powertrain akin to installing an internal combustion engine in a Tesla Model Y.
