The Challenge Of Insuring Vehicles With Autonomous Functions

Insurers are struggling with pricing and coverage as self-driving features come online

This article first appeared in Forbes.

By around 2035, up to one‑third of cars are likely not to have a driver

Autonomous cars offer the promise that 20 years from now we’ll live in a world where cars take themselves to the gas station while we’re sleeping to fill up or charge up for the next morning’s drive, where we can enjoy texting on the ride to work without totaling our car, and where getting a learner’s permit will no longer be a teenage rite of passage. The day of the autonomous car is approaching, and while not every vehicle on the road will be without a driver once that day arrives, it’s expected that by around 2035, up to one-third are likely not to have one. 

While it’s a scenario that every auto insurer has heard about and dreads, it’s not the scenario auto insurers should really be focused on today. Instead, they need to concentrate on the artificial intelligence already making its way onto the roads. Long before self-driving cars make a significant impact, advanced driver assistance systems (ADAS) are about to upend accidents and claims experience in the industry’s pricing and underwriting models. Insurers are starting to get their first glimpse of the dramatically different world of driving they will be confronting for the next 15 to 20 years. It’s a landscape populated by the full spectrum of vehicles – from traditional car and driver, to those that are partially self-piloted, with even a small set of experimental self-drivers. While the number of cars with such innovations as autonomous braking and automatic steering correction functions is still small, that won’t be the case for long.

Through 2025, the percentage of cars on the road with advanced driver assistance systems is expected to jump from a little more than 10 percent in 2015, to close to 40 percent, according to a report by Oliver Wyman research division Celent. By 2030, half of the cars on the road will have multiple advanced driver-assistance systems.Thanks to the projected exponential growth in artificial intelligence systems, our roads will be filled with cars, trucks, and buses partially driving themselves. Our skies will see various degrees of self-piloting cargo planes and delivery drones, while our seas will be traversed by versions of self-navigating freighters. By the middle of this century, the world of transportation will no longer resemble what it looked like at the turn of the millennium.



Technology is redefining the way we own and use cars – also how we insure them. As the proportion of partial and fully autonomous vehicles sharing the road with traditional vehicles increases, there will be a period of uncertainty over how insurance claims costs are likely to develop.

Source: Oliver Wyman analysis

The Challenge of Insuring Vehicles with Autonomous Functions

Partner Fady Khayatt on how insurers should prepare for more vehicles with autonomous functions

About authors

Fady Khayatt, an Oliver Wyman partner who specializes in insurance, splits his time between London and Paris. Marc Boilard is a Paris-based partner in Oliver Wyman's Automotive practice. Rouget Pletziger is a Frankfurt-based principal and insurance specialist in Oliver Wyman's Financial Services practice.

The Challenge Of Insuring Vehicles With Autonomous Functions