KPMG Report - Auto Insurance Sector Could Shrink By 71 Percent


Shifting driving risk to auto manufacturers and rapid adoption of Mobility-on-Demand will have significant impact on insurance business


Autonomous vehicle technology could shrink the auto insurance sector by 71 percent or $137 billion by 2050, according to new research by KPMG, titled The Chaotic Middle: The Autonomous Vehicle and Disruption in Automobile Insurance. KPMG has extended its actuarial model by 10 years to 2050, finding that the pace of change has accelerated, pushing projections that illustrate greater declines to the insurance sector than KPMG's previous 2015 study. It also shows an increasing need for new types of insurance products.

"Insurance companies will have to make important strategic and tactical changes sooner than anticipated to navigate through this turbulent transformation of the industry," said Jerry Albright, principal in KPMG's Actuarial and Insurance Risk practice. "New business models bring about a decade or so of a 'chaotic middle' as insurers adjust their strategies and operations as autonomous vehicle technologies significantly deplete the need for personal auto insurance."

Chris Nyce, principal in KPMG's Actuarial and Insurance Risk practice, added, "Building the latest observations into our actuarial model affirms the projected long-term decline in the number of auto accidents overall, and the share of accident claims funded by personal auto policies will also contract. Partially offsetting this, average repair costs will continue to increase at a higher rate than overall inflation as new technologies in future cars become more expensive to repair."

The Triad of Disruption in the Auto Insurance Industry

Three major forces are disrupting the current, $247 billion premium, auto insurance marketplace:

Autonomous technology is making cars increasingly safer, leading to a potential 90 percent reduction in accident frequency by 2050.

Auto manufacturers (OEMs) will assume more of the driving risk and associated liability, and have new opportunities to provide insurance to car buyers, taking market share away from traditional insurers. KPMG estimates that by 2050 there will be a significant increase in products liability insurance to 57% of total auto losses in order to cover the autonomous technology in vehicles, and a considerable decrease in personal auto insurance to 22% of total auto losses.

The rapid adoption of mobility-on-demand is quickly translating into the need for less personal auto coverage, with the use of fleets requiring commercial auto insurance.

"Insurance companies are varied in their level of preparedness for this disruption and many have taken limited action to face this challenge," said Joe Schneider, managing director at KPMG Corporate Finance LLC. "As a result, auto insurers may choose to branch out into home-related products, or other commercial coverage, to benefit from diversification."

A New Mix of Auto Insurance Coverage

By 2024, the majority of travel within cities and surrounding suburbs is expected to be on-demand rather than with a personal vehicle, and by 2035 it is expected to be the new normal in transportation. As a result, products liability coverage and other new types of insurance are expected to pay a greater share of claims resulting from roadway accidents. Cyber risk is a good example of a new type of risk associated with the era of driverless cars, and market participants are building new products to cover the potential hacking of autonomous vehicles.

Autonomous Capabilities on a Fast Track

The auto insurance industry is further disrupted by the surge of "smart money" generated by a variety of sources including venture capital (VC) firms. "The infusion of capital is boosting the development of autonomous capabilities and related business models, thereby accelerating the pace at which highly automated vehicles will hit the market," added Schneider.

The Latest News, Brought To You By
KPMG Report - Auto Insurance Sector Could Shrink By 71 Percent
Modified on Thursday 29th June 2017
Find all articles related to:
KPMG Report - Auto Insurance Sector Could Shrink By 71 Percent
TaaS Technology Magazine

Tuesday 9th - Wednesday 10th July 2019 @ The National Motorcycle Museum

Transportation-as-a-Service (TaaS) Technology will evolve in 2019 from the inaugural conference which took place in 2018, into two co-located conferences plus a shared exhibition. As per 2018 TaaS Technology will cover Connected and Autonomous Vehicles (CAVs) and Future Mobility. The new co-located conference will look at 'Energising Future Mobility' and will focus on the key topics surrounding Electric Vehicles (EVs), Battery/Energy Technology and Infrastructure.

Places will be limited, so register your place today:
Ottopia Announces Collaboration With Denso
Innovusion Announces Its High-resolution Image-grade LiDAR System
Clavister And Tieto Team Up To Improve Cybersecurity Of Connected And Autonomous Cars
NVIDIA’s Supercomputer Supports Self-Driving Cars
Local Motors Deploys Autonomous Shuttles At Joint Base Myer-Henderson Hall
Greenlots Expands EV Fast Charging Infrastructure For Portland General Electric
Mapbox And Luxoft Partner To Bring AI And AR To In-Vehicle Navigation
Renovo And Seagate To Develop Next Generation Data Management Solutions For AV
Paul Rivera Takes Over As CEO Of Electra Meccanica
Zenuity To Supply Autonomous Driving And ADAS Software Technology To Geely Group
Rolec EV To Trial Smart EV Charging At Almost 500 UK Homes
Ficosa Receives European RED Certification For C-V2X Technology From Its CarCom Platform
Volkswagen Introduces New Software Unit
Volkswagen And Schwarz Group Partner To Install EV Fast Charging Stations
Applied Information And Commsignia Deploy C-V2X Technology In Washington
Warrington Council Installs 56 EV Charging Points At Time Square Car Par
London May Need Around 50,000 Additional EV Charging Points By 2025
EVgo Announces New Roaming Access For EV Charging
Volvo Group Partners With NVIDIA To Develop Advanced AI Platform For Autonomous Trucks
Peugeot To Launch The All Electric E-2008 SUV In Early 2020
Camion Transport And Migros To Test Mercedes-Benz EActros In Switzerland
ENGIE Acquires British EV Charging Solutions Provider ChargePoint
Designated Driver Joins AutonomouStuff’s Open Autonomy Pilot Programme
Renault-Nissan Alliance Signs Deal With Waymo To Expand Autonomous Mobility Services
Search the news archive

To close this popup you can press escape or click the close icon.
Register - Step 1

You may choose to subscribe to the TaaS Magazine, the TaaS Newsletter, or both. You may also request additional information if required, before submitting your application.

Please subscribe me to:


You chose the industry type of "Other"

Please enter the industry that you work in:
Please enter the industry that you work in: