A recent “abstract analysis” by Celent asked the following:  “Could the broad adoption of available technologies result in a radical reduction in the auto insurance business?
Think about it…there are already cars that park themselves.  It is anticipated that robot cars will be available in the next four years.  It’s not a stretch at all to imagine a world in which accidents are reduced dramatically.  Reduced to the point that very few accidents actually occur.

If that happens, certainly insurers will be paying out less, and thus rates will drop.  It’s hard to say how much, but it will happen.  A world with telematics, collision avoidance and automated traffic law enforcement is coming and soon.

The Celent study estimates that full, operational robot cars will be actively in the marketplace between 2023 and 2027.  This will include special lanes and tax incentives.
“In the near term, an auto insurer should be asking itself three questions,” says Donald Light, Senior Analyst with Celent’s Insurance group and author of the report. “First, how is it monitoring technology-driven changes in insured losses, (i.e., the progress of the scenario)? Second, do scenario technologies provide new kinds of data and analytics-driven changes in pricing, underwriting, etc.? And third, what should it do differently this year and next?”

“In the longer term, insurers with a significant amount of auto business have to grapple with some very challenging enterprise strategy issues,” he adds.

Celent is a research and consulting firm focused on the application of information technology in the financial services industry.