Safety advances could spell end of auto insurance: Celent

The auto insurance industry may suffer a steep decline if technology that reduces the frequency and severity of car accidents is widely adopted, concludes a new study by research firm Celent.

The research points to four specific types of technology — telematics, collision avoidance, automated traffic law enforcement and, to a lesser degree, robotic vehicles — as examples of widely available safety tools. If these are deployed at national and local government levels, Celent suggests that insurers would see a significant drop in revenues and premiums.

“The scenario is plausible because most of the technologies on which it depends are already available — and to some extent are already in use,” the research firm states in A Scenario: The End of Auto Insurance: What Happens When There Are (Almost) No Accidents.  “The likelihood of the scenario depends primarily on political decisions.”

Under the scenario, insurers could see reductions in total property/casualty industry premium by 9% from 2013 to 2017, and by 26% from 2018 to 2022.

“Celent believes that… the probability of it occurring is sufficiently high that auto insurers should devote some resources to considering the scenario and its implications for their business model and enterprise,” notes the report.

“For an insurer whose auto premium is a material percentage of its total premium, these implications are potentially large and far-reaching.”