With the first commercially available technology expected to hit the road in 2018, the forecast assumes an 81 percent reduction in claims frequency, and an increase in claims severity due to sensor costs and an increased cost of handling product liability claims.
Personal motor accounts for 47 percent of global insurance premium – without this ballast and implicit capital subsidy, Aon Benfield estimates that US property-casualty insurance volatility could increase by 40 percent.
Paul Mang, CEO of Aon Analytics, said: "Adoption of autonomous vehicles will of course be affected by many variables such as regulatory challenges, cost to the consumer, safety, vehicle ownership preferences, and the technology itself. However, we as an industry need to act quickly to ensure that we have the products available to align to the new paradigm; if we fail to do so, we only invite disruption."
Now in its 11th edition, the Global Insurance Market Opportunities report examines the ways in which insurers can be innovative organisations, and how the industry can capture opportunities from innovation and defend against threats of disruption.
In terms of opportunities, if the current pace of growth is maintained, Aon Benfield forecasts that by 2020 global cyber premiums could reach USD10 billion – a figure at least as large as the worldwide directors' and officers' liability market. Furthermore, the Global Council on Internet Governance has forecast that cybercrime could grow to USD2 to 3 trillion by 2020 – equivalent to the GDP of a top 10 economy.
In terms of potential disruption, the report reveals that in 2015 there was USD2.6 billion of investment across more than 200 insurance startups, part of USD9 billion invested in the sector in the past several years globally.
Mr. Mang added: "Venture capitalists are not interested in our industry in its current form; they are aiming to reorganise our processes and operations in order that they can create new economic opportunities for themselves."
The Global Insurance Market Opportunities report suggests that insurers should perform a careful examination of their own value chain, with the aim of evaluating core strengths and identifying weaknesses. Firms should also think carefully about how data and analytics can be applied to serving clients and reorganising core operations.
The full report can be found at http://aon.io/2bW3AWG
For further information please contact Andrew Wragg (+44 207 522 8183 / 07595 217168) David Bogg or Alexandra Lewis
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SOURCE Aon plc