July 26, 2017—With the rapid advancement of autonomous vehicles, traditional personal auto insurance has the potential to be severely disrupted by new competition and shifts to other types of insurance coverage, meaning they are likely to form partnerships with OEMs.
Autonomous vehicle technology could shrink the auto insurance sector by 71 percent—or $137 billion—by 2050, according to a report from KPMG. As such, the core business model for traditional auto insurance carriers may be under threat of obsolescence, and manufacturers have the potential to be a viable alternative to cover driving risk.
While this reality will be an incredible upheaval to the traditional business model for insurance companies, there are opportunities for partnerships with OEMs, Jerry Albright, an author of the KPMG report. He said there will be a proliferation for partnerships just OEMs and insurers can't afford to stick it out alone, creating potential for relationships and strategic partnerships between the two parties.
Automakers will assume more of the driving risk and associated liability, the report stated, and have new opportunities to provide insurance to car buyers—taking marketshare away from traditional insurers.
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