Insurance industry must adapt to stay relevant in a driverless world
24 Aug, 2016, 10:00 BST
- Just one in four UK drivers (26%) expects to be served by the insurance industry as it stands today if they owned a driverless car and 31% expect cover to become cheaper
- Technology poses major scope for insurance disruption with 16% of UK drivers believing their needs will be met by new market entrants and 8% believing driverless cars will make insurance in its current form obsolete
- Technology faces challenges in adoption; safety, specifically in higher risk driving situations such as wet weather and heavy traffic, is the key issue for car manufacturers to overcome
LONDON, Aug. 24, 2016 /PRNewswire/ -- The development of driverless cars could pose challenges for the insurance industry, according to a new study by LexisNexis Risk Solutions, with only 26% of UK drivers expecting their insurance cover in a driverless future to be provided by the industry as it stands today. Nearly a third of UK drivers (31%) also expect it to be provided at a lower price. This means, the industry will need to consider how to remain relevant and profitable as technology evolves.
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The technology behind driverless cars still faces significant barriers to overcome in terms of public attitudes. The majority (50%) of UK drivers view driverless cars as a good idea, yet this is set against close to a quarter (23%) who see driverless cars as offering more drawbacks than benefits. There is also a minority (14%) who do not see any benefits whatsoever.
Safety is the main stumbling point for public opinion, despite human error causing nearly all (94%) road accidents1. UK drivers are split with 31% anticipating an improvement in safety, set against 29% who expect the roads to be more unsafe. The key drawbacks cited by consumers today are trust in the reliability of the driverless technology (58%), its ability to respond to behavioural cues outside of ordinary driving, such as instructions from road workers (53%), drivers losing skills through lack of practice (52%), performance in bad weather (45%) and the potential impact of job losses in sectors employing drivers, such as logistics or public and private transport (42%).
Bill McCarthy, Managing Director, UK and Ireland Insurance, LexisNexis Risk Solutions, said, "Driverless cars as a mainstream choice are still some way off in technology terms, but it is also clear that there's a gulf to be crossed in terms of consumer opinion. Some of this is almost certainly a lack of familiarity and this may diminish as vehicles become more autonomous overtime, but it is evident that genuine concerns around safety and ethics exist. Tackling these concerns and communicating benefits has to be a focus for manufacturers – we know, for example, that cars built today with autonomous emergency braking are significantly less likely to kill or injure than cars only a few years older, but is this message reaching consumers and is it being applied to the future of driverless cars? Our research suggests not."
The study also reveals that the technology will likely face obstacles from the driver, with 42% believing that drivers will be reluctant to give up control over the route, speed or how the car manoeuvres. Also important is the loss of the driving experience itself, often a key feature of car advertising and cited by 39% of respondents.
Consumers are aware of the potential benefits, however, with 39% citing a reduction in traffic accidents with a computer able to make a faster and safer reaction than a human driver, 38% seeing a resulting benefit from lower insurance premiums as claims fall, whilst 37% and 33% cite a reduction in the stress of driving and a reduction in traffic jams and congestion respectively.
For the insurance industry, the future poses challenges and the scope for disruption is present, with nearly one in ten consumers (8%) believing that coverage simply will no longer be needed and 16% expecting their insurance to be provided by a business currently outside of the industry, for example, directly from the car manufacturer. This means that the industry must ensure it stays relevant as technology continues to evolve.
"For the insurance industry, significant disruption lies ahead. The successful motor insurer of the future, in our view, will be the one that is today seeking to understand how underwriting can keep up with or even pioneer the new car and data technologies, such as telematics, that are already revolutionizing the sector. We believe the future for the sector is bright, but that the industry is best served through adaption and learning from the technologies and capabilities available today," concluded McCarthy.
Notes to editors
Methodology
All figures, unless otherwise stated, are from a poll carried out on behalf of LexisNexis Risk Solutions by Consumer Intelligence on a nationally representative survey of 1,314 insured drivers and policy decision makers aged 18 and over living in the UK. The online survey was conducted in July 2015.
About LexisNexis Risk Solutions
LexisNexis Risk Solutions (http://www.lexisnexis.com/risk/) is a leader in providing essential information that helps customers across industries and government predict, assess and manage risk. Combining cutting-edge technology, unique data and advanced analytics, LexisNexis Risk Solutions provides products and services that address evolving client needs in the risk sector while upholding the highest standards of security and privacy. LexisNexis Risk Solutions is part of RELX Group plc, a world-leading provider of information solutions for professional customers across industries.
For more information on LexisNexis Risk Solutions, visit: http://www.lexisnexis.com/risk/uk/insurance/.
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