Insurance coverage for autonomous vehicles will bring US$81 billion in new premiums to the U.S. auto insurance industry over the next eight years, driven by risks related to cybersecurity, software and hardware and by the need for additional public infrastructure coverage, according to a new report from Accenture and Stevens Institute of Technology.
“Insurers are bracing for long-term declines in auto premiums as new and safer autonomous vehicles gain adoption,” said John Cusano, a senior managing director at Accenture and global head of the company’s Insurance practice. “However, our research suggests that auto premiums will increase before they decline on this trend, so insurers that can navigate the changing technology environment could win market share.”
The research found that cybersecurity, product (software and hardware) liability and public infrastructure insurance for autonomous vehicles could reach a total of $81 billion by 2025.
Three new business lines — cybersecurity, product liability for sensors and software algorithms, and public infrastructure — are going to drive billions in new insurance premiums for the U.S. auto insurance industry in the coming years, according to Accenture.
Cybersecurity: Protection against remote vehicle theft, unauthorized entry, ransomware and hijacking of vehicle controls, as well as coverage for identity theft, privacy breaches and the theft or misuse of personal data. The research found that cybersecurity insurance will be the greatest potential driver of new premiums, totaling $64 billion by 2025, followed by product liability insurance ($14 billion) and public infrastructure insurance ($3 billion).
Product liability for sensors and software algorithms: Manufacturer coverage for failures related to communications (e.g., internet connection), software (including bugs, memory overflow and program defects) and hardware (sensory circuit failure, camera vision loss, and radar and lidar failures).
Public infrastructure: Insurance for cloud server systems that manage traffic and road networks, in addition to failure of external sensors and signals; and communication problems originating at the system level.
The report notes that this premium growth will precede an anticipated decline in industry revenue beginning in 2026 and that, as roads become safer and policies shift from consumers to autonomous vehicle manufacturers and other service providers, insurers will see reduced demand for personal insurance.
You can find the report here.
[Image courtesy: Accenture]