Multi-billion pound motor insurance industry faces radical restructuring due to autonomous cars
The multi-billion pound motor insurance industry faces a period of radical restructuring as a result of the advent of autonomously driving cars, with the number of crashes set to drop by 80 per cent by 2035* and insurance premiums set to plummet, a high-level panel discussion organised by Volvo Cars and Thatcham Research will hear today.
Research by Swiss Re and HERE** released earlier this month calculated that autonomous drive (AD) technologies could wipe USD20bn off insurance premiums globally by 2020 alone. At present, motor insurance generates 42 per cent of all non-life gross premiums, the largest single slice of global premiums**.
Volvo Cars believes that the insurance industry will have no choice but to react to these seismic challenges to its existing business model.
“The medium-to-long-term impact on the insurance industry is likely to be significant. But let’s not forget the real reason for this – fewer accidents, fewer injuries, fewer fatalities. Autonomous drive technology is the single most important advance in automotive safety to be seen in recent years,” Hakan Samuelsson, president and chief executive of Volvo Cars, will tell a seminar to be held later today in London entitled ‘A Future with Autonomous Driving Cars – Implications for the Insurance Industry’.
Peter Shaw, chief executive at Thatcham Research, said: “Vehicle manufacturers are predicting that highly autonomous vehicles, capable of allowing the driver to drop ‘out of the loop’ for certain sections of their journey, will be available from around 2021. Without doubt, crash frequency will also dramatically reduce. We’ve already seen this with the adoption of Autonomous Emergency Braking (AEB) on many new cars. Research in the US by NHTSA predicts that by 2035, as a result of autonomous and connected cars, crashes will be reduced by 80 per cent. Additionally, if a crash unfortunately can’t be avoided, then the impact speed will also drop as a result of the system’s performance – reducing the severity of the crash.”
Volvo Cars is fully committed to maximising the safety benefits of AD cars. It announced last week that it will start the UK’s most extensive AD trial, entitled Drive Me London, in 2017, with up to 100 AD cars being driven on real roads by real people, part of its global push to develop AD cars with similar programmes to be run in Sweden and China.
“The automotive industry cannot do this on its own,” Mr Samuelsson will tell the gathered audience. “We need the government’s help. It is essential that car makers work with the government to put in place laws and regulations that allow us to get these cars on the road as soon as possible and start saving lives.”
Sajid Javid, UK Secretary of State for Business, Innovation and Skills, said: “Driverless cars will see our journeys become faster, cleaner and safer. The UK is leading the way in developing the technology needed to make this a reality thanks to our world-class research base, and these types of trials will become increasingly common.
“Such advances in technology prove the fourth industrial revolution is just around the corner, and our determination to be at the forefront is why we are attracting top names from across the globe for real-world testing.”
Mr Samuelsson will say that he looks forward to working with the UK government to ensure that this technology can be introduced as soon as possible.
“The advent of autonomous driving represents a revolution for automotive safety,” Mr Samuelsson will say. “Volvo has a vision that no one will be killed or seriously injured in a new Volvo by 2020. Autonomous drive technology is a key tool in helping us achieve this aim.”
Notes to editors:
* Research in the US by NHTSA
** 'The future of motor insurance – How in-car connectivity and ADAS are impacting the market', Swiss Re/HERE, 2016 – Link to report
Volvo Car Group in 2015
For the 2015 financial year, Volvo Car Group recorded an operating profit of 6,620 MSEK (2,128 MSEK in 2014). Revenue over the period amounted to 164,043 MSEK (137,590 MSEK). For the full year 2015, global sales reached a record 503,127 cars, an increase of 8 per cent versus 2014. The record sales and operating profit cleared the way for Volvo Car Group to continue investing in its global transformation plan.
About Volvo Car Group
Volvo has been in operation since 1927. Today, Volvo Cars is one of the most well-known and respected car brands in the world, with sales of 503,127 in 2015 in about 100 countries. Volvo Cars has been under the ownership of the Zhejiang Geely Holding (Geely Holding) of China since 2010. It formed part of the Swedish Volvo Group until 1999, when the company was bought by Ford Motor Company of the US. In 2010, Volvo Cars was acquired by Geely Holding.
As of December 2015, Volvo Cars had almost 29,000 employees worldwide. Volvo Cars’ head office, product development, marketing and administration functions are mainly located in Gothenburg, Sweden. Volvo Cars’ head office for China is located in Shanghai. The company’s main car production plants are located in Gothenburg (Sweden), Ghent (Belgium), Chengdu and Daqing (China), while engines are manufactured in Skövde (Sweden) and Zhangjiakou (China), and body components in Olofström (Sweden).