Autonomous Vehicles Will Add US$81 Billion in New Premiums for Auto Insurers by 2025, According to Accenture Report
May 18 2017 - 09:30AM
Business Wire
Insurance coverage for autonomous vehicles will bring US$81
billion in new premiums to the U.S. auto insurance industry over
the next eight years, driven by risks related to cybersecurity,
software and hardware and by the need for additional public
infrastructure coverage, according to a new report from Accenture
(NYSE:ACN) and Stevens Institute of Technology.
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“Insurers are bracing for long-term declines in auto premiums as
new and safer autonomous vehicles gain adoption,” said John Cusano,
a senior managing director at Accenture and global head of the
company’s Insurance practice. “However, our research suggests that
auto premiums will increase before they decline on this trend, so
insurers that can navigate the changing technology environment
could win market share.”
For the report, “Insuring Autonomous Vehicles: An $81 Billion
Opportunity by 2025,” Stevens Institute of Technology developed
several models to evaluate the impact of autonomous vehicle
technology on the insurance industry. These models were then
applied to different scenarios and insurance products based on
parameters set by Accenture’s Insurance and Connected Transport
teams.
The research found that cybersecurity, product (software and
hardware) liability and public infrastructure insurance for
autonomous vehicles could reach a total of US$81 billion by 2025.
The report notes that this premium growth will precede an
anticipated decline in industry revenue beginning in 2026 and that,
as roads become safer and policies shift from consumers to
autonomous vehicle manufacturers and other service providers,
insurers will see reduced demand for personal insurance.
Larry Karp, a co-author of the report and global insurance
telematics lead in Accenture Mobility, part of Accenture Digital,
said, “Three new business lines — cybersecurity, product liability
for sensors and software algorithms, and public infrastructure —
are going to drive billions in new insurance premiums for the U.S.
auto insurance industry in the coming years. Forward-thinking
insurers are already putting these new products at the top of their
agenda as they look to capitalize on the first-mover
advantage.”
The research found that cybersecurity insurance will be the
greatest potential driver of new premiums, totaling US$64 billion
by 2025, followed by product liability insurance (US$14 billion)
and public infrastructure insurance (US$3 billion).
These three new business lines include:
- Cybersecurity: Protection
against remote vehicle theft, unauthorized entry, ransomware and
hijacking of vehicle controls, as well as coverage for identity
theft, privacy breaches and the theft or misuse of personal
data.
- Product liability for sensors and
software algorithms: Manufacturer coverage for failures related
to communications (e.g., internet connection), software (including
bugs, memory overflow and program defects) and hardware (sensory
circuit failure, camera vision loss, and radar and lidar
failures).
- Public infrastructure: Insurance
for cloud server systems that manage traffic and road networks, in
addition to failure of external sensors and signals; and
communication problems originating at the system level.
Chen Liu, co-author of the report and a research assistant at
Stevens Institute of Technology’s School of Systems and
Enterprises, said, “This research is an important step in helping
insurers understand how their business models need to evolve over
the next decade. Autonomous-vehicle technology will drive a
significant shift in risk from human error to malicious third
party, software, hardware and infrastructure risk. Understanding
and proactively responding to this anticipated enterprise
transformation is imperative.”
For more information on the report, please click here.
About the Research
Accenture, in collaboration with Stevens Institute of
Technology, conducted proprietary research into autonomous vehicle
technology and its impact on the insurance industry in the United
States. The research was conducted from October 2016 to March 2017.
Dynamic algorithmic forecasting models were constructed, with
researchers using different variables and assumptions to forecast
expected premium declines and gains for U.S. insurers. These
assumptions included, among other things, differing speed of
adoption and market saturation of autonomous-vehicle technology;
accident rates and severity; population and vehicle mileage growth
rates; current and future expected software and hardware failure
rates; and expected sensor requirements in small, medium and large
cities.
About Accenture
Accenture is a leading global professional services company,
providing a broad range of services and solutions in strategy,
consulting, digital, technology and operations. Combining unmatched
experience and specialized skills across more than 40 industries
and all business functions – underpinned by the world’s largest
delivery network – Accenture works at the intersection of business
and technology to help clients improve their performance and create
sustainable value for their stakeholders. With approximately
401,000 people serving clients in more than 120 countries,
Accenture drives innovation to improve the way the world works and
lives. Visit us at www.accenture.com.
About Stevens Institute of Technology
Stevens Institute of Technology, The Innovation University®, is
a premier, private research university situated in Hoboken, N.J.
overlooking the Manhattan skyline. Founded in 1870, technological
innovation has been the hallmark and legacy of Stevens’ education
and research programs for 147 years. Within the university’s
three schools and one college, 6,600 undergraduate and graduate
students collaborate with more than 290 full-time faculty members
in an interdisciplinary, student-centric, entrepreneurial
environment to advance the frontiers of science and leverage
technology to confront global challenges. Stevens is home to three
national research centers of excellence, as well as joint research
programs focused on critical industries such as healthcare, energy,
finance, defense, maritime security, STEM education and coastal
sustainability. The university is consistently ranked among the
nation’s elite for return on investment for students, career
services programs and mid-career salaries of alumni. Stevens is in
the midst of a 10-year strategic plan, The Future. Ours to
Create., designed to further extend the Stevens legacy to create a
forward-looking and far-reaching institution with global
impact.
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AccentureJames Murphy,
973-524-1136James.p.murphy@accenture.com
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