Why self-driving cars could upset insurers

Self-driving cars and automatic safety features are set to reduce the number of road accidents in the future, but could seriously affect the revenues of car insurers, according to new research.

By 2030, there will be 380 million semi, highly or fully autonomous vehicles on the roads, which are expected to reduce the number of road accidents by 30 percent and lead to reduced insurance premiums, a global study of road accidents and user-based insurance by consulting firm PTOLEMUS found.


A bicyclist rides by a Google self-driving car at the Google headquarters.
Justin Sullivan | Getty Images
A bicyclist rides by a Google self-driving car at the Google headquarters.

The car insurance market could shrink by up to 40 percent by 2030 due to declining insurance premiums, depending on how widely autonomous vehicles are adopted by drivers, according to the study.

Even a small decline would be significant: income from premiums in the U.S. totalled $1.28 trillion in 2014 and was $350 billion in the U.K., according to figures from the Association of British Insurers (ABI).

"The emergence of autonomous vehicles may appear as a remote risk today," said Frederic Bruneteau, managing director of PTOLEMUS, in a press release.

"However, this is a collision insurance companies must face and the magnitude of its impact is extremely high."

Insurers in the U.K. are carefully considering the challenges presented by self-driving vehicles. Thirteen U.K. car insurers, including Aviva, have grouped together to form the ABI and address concerns.

"Developments in autonomous driving are increasingly being seen in new cars – from autonomous braking to self-parking," a spokesperson from insurer Aviva told CNBC via email. "Insurance is a key part of these developments and it's important that insurers work together to understand the impacts."

One impact identified by the ABI is who would be held liable after an accident involving one or more autonomous vehicles. Would it be the driver, the manufacturer, or the systems developer of a self-driving car?

However, the ABI is not planning to stop autonomous vehicles getting on the road.

"Contrary to what some people might expect, insurers are not standing in the way of this development but actively looking to support progress and innovation," said James Dalton, director of general insurance policy at the ABI, in a press release. "Truly driverless cars have the potential to dramatically reduce deaths and injuries on the roads and could revolutionize what we think of as public transport.

"The role of motor insurance in such a future will be very different to what it is today, but insurance will be part of the picture."

Follow CNBC International on Twitter and Facebook.