Impact of Self-driving cars on Insurance Industry. How do (external) challenges and innovations change the insurance market?

Seminar Paper , 2016 , 13 Pages

Business economics - Banking, Stock Exchanges, Insurance, Accounting

The future may be uncertain and hard to predict, but it should not be hard to prepare for. Internet and other digital platforms have transformed the way people interact and how they do business in almost all sectors of the economy. This has led to far-reaching challenges and innovations that could have an impact on both current and future of numerous economic sectors. In insurance, for instance, a sector which has remained largely the same for more than three decades, it has a great influence on its value chain right from production, sales and distribution to claims and payments.

This report examines self-driving cars, a digital innovation involving vehicles with the capacity to sense their environment and navigate through the pathways without human driver inputs. Their ability to analyze sensory data that in return enables them distinguish between different cars in the road increases driving efficacy and as a result likely to alter current state of both automobile and life insurance industry substantially because of the likelihood that their adoption will significantly reduce the number of traffic accidents as majority of road accidents traditionally are perceived to be caused by driver error/negligence consequently shrinking insurance bills and claims for customers.

This study further examines how this innovation (autonomous cars) would influence insurance markets/business while exploring the various responses which the insurance industry has/will put in place to help cope with these changes in the future to enable them to remain sustainably relevant in the market.

TABLE OF CONTENTS

Introduction

Self-driving vehicle Innovation/Technology

Traditional Car Insurability Criteria

Other affected sectors and their coping strategies with self-driving cars

Impact of Self-driving cars on Insurance Industry
(i) Alteration of the insurance Value Chain
(ii) Reduced Demand for Insurance - Lower Premiums and Potential Revenues
(iii) Pricing and Underwriting
(iv) Impact on claims

Response Strategies by the Insurance Industry

The future of insurance industry with Autonomous Vehicles

Conclusion

References

• College: University of Westminster
• Course: MSc Finance, Banking and Insurance
• Author: Richard M. Ondimu (Author)
• Publication Year: 2016
• Pages: 13
• Catalog Number: V379068
• ISBN (eBook): 9783668577862
• ISBN (Book): 9783668577879
• Language: German
• Tags: impact, self-driving, insurance, industry