Like record companies at the dawn of online music file sharing, Allstate, Geico, State Farm, and others are grappling with innovations that could put a huge dent in their revenue. As carmakers automate more aspects of driving, accidents will likely plunge and car owners will need less coverage. Premiums consumers pay could drop as much as 60 percent in 15 years as self-driving cars hit the roads, says Donald Light, head of the North America property and casualty practice for Celent, a research firm. His message for insurers: "You have to be prepared to see that part of your business shrink, probably considerably."
Auto insurance has long been a lucrative business. The industry collected about $195 billion in premiums last year from U.S. drivers. New customers are the source of so much profit that Geico alone spends more than $1 billion a year on ads to pitch its policies with a talking lizard and other characters. Yet even Warren Buffett, whose company, Berkshire Hathaway, owns Geico, is talking about the long-term risks to the business model. "If you could come up with anything involved in driving that cut accidents by 30 percent, 40 percent, 50 percent, that would be wonderful," he said at a conference in March. "But we would not be holding a party at our insurance company."
The loss of revenue for the insurance industry gives me a sad.
(Score: 2) by mr_mischief on Friday July 31 2015, @04:04PM
The insurance companies aren't car insurance companies or life insurance companies for the most part any more. They mostly will sell you car insurance, homeowners' or renters' policies, life insurance policies, professional liability, and more.
There's more to car insurance than liability and collision. There's theft, act of nature, vandalism, etc. They often combine most coverages into "comprehensive".
If cars are much safer, then the chances of paying out should go down. The amounts paid out per accident should also go down.
You folks should realize one of the biggest proponents and participants for car safety testing, rating cars for safety relative to one another, and pushing government for safety regulations is the Insurance Institute for Highway Safety. They want smaller risk so they can invest more of your policy float.
(Score: 2) by WillR on Friday July 31 2015, @04:44PM