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Self-driving cars: Great for safety, but they'll lose the insurance industry $20 billion

The new self-driving cars will be good for road safety, but they'll also hurt the vehicle insurance industry, with research suggesting that it could cut US$20 billion from insurance premiums worldwide by 2020.

The research, conducted by US companies 'Swiss Re' and 'Here', found that the number of crashes will drop by 80% by 2035, which will dramatically cut into insurance revenue. That revenue accounts for 42% of all US non life gross premiums, the largest single slice of global premiums.

Coby Duggan, Volvo New Zealand national manager, says that both insurance companies and vehicle manufacturers have to adapt or die from the new autonomous driving (AD) technologies.

“The medium to long term impact on the insurance industry is likely to be significant. Autonomous driving technology is the single most important advance in automotive safety to be seen in recent years. It will mean fewer accidents, fewer injuries, fewer fatalities and fewer costs for vehicle owners,” Duggan says.

Peter Shaw, Thatcham Research chief executive, says the development of highly AD technology will eventually be able to let drivers drop 'out of the loop' for certain parts of the journey as early as 2021.

“Without doubt, crash frequency will also dramatically reduce. We’ve already seen this with the adoption of Autonomous Emergency Braking (AEB) on many new cars. Research predicts that by 2035, as a result of autonomous and connected cars, crashes will be reduced by 80 per cent. Additionally, if a crash unfortunately can’t be avoided, then the impact speed will also drop as a result of the system’s performance - reducing the severity of the crash,” Shaw says.

Duggan sees the benefits of AD technology, and says Volvo is committed to developing AD initiatives in the UK, Sweden and eventually China.

“The introduction of autonomous driving represents a revolution for automotive safety. Volvo has a vision that no one will be killed or seriously injured in a new Volvo by 2020. Autonomous drive technology is a key tool in helping us achieve this aim,” Duggan says.

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