The Chief Executive Officer (CEO) of Lloyd’s of London, John Neal, has revealed that the specialist insurance and reinsurance marketplace is in discussions with automakers about new and different types of insurance protection in response to the rise of driverless cars, reports Bloomberg. In a recent interview and in light of news that Tesla is to launch its own insurance programme that is to be fronted by Markel’s State National, the Lloyd’s CEO Neal said that the shift is inevitable. Huge advancements have been made with driverless cars and increasingly it seems to be a matter of when and not if they are widely used. “Within five years, particularly in an urban environment, we’ll find a very different approach to the supply of a motor vehicle and the insurance that goes with it. It won’t be conventional motor insurance,” said Neal. For motor insurers and reinsurers, the concern is that driverless cars could dramatically lower the need for individuals to buy auto policies. Neal explained that while the type of auto coverage is sure to change, it does not mean the end of car insurance. It’s unclear exactly what the motor re/insurance market will look like once driverless cars are widely used, but it’s clear that providers of coverage will have to innovate and develop new solutions in order to remain relevant. The UK government expressed its support for fully autonomous vehicles to be in use by 2021, extending the Automated and Electric Vehicles Bill from compulsory motor insurance to include autonomous vehicles. Analysis by Deutsche Bank in the summer of 2018 claims that autonomous driving may cause market volumes to decline by 20-40% by 2040. At the same time, analysts also said that Swiss Re, the largest global motor reinsurer, sees itself as well placed to benefit from anticipated structural changes to the market. It seems very likely that the rise of driverless cars is going to have a big impact on the motor insurance and reinsurance industry, so it’s promising to hear that Lloyd’s is already working to try and keep pace with the change in order to remain relevant in a rapidly evolving risk landscape.
Lloyd's of London CEO John Neal has said carmakers and insurers are discussing new types of policy in light of the development of driverless vehicles. He said the rise of autonomous vehicles (AVs) won't reduce the need for car insurance and forecast that the urban motor insurance market will have developed a different approach within five years as AV use grows. Tesla recently revealed it was partnering with Deutsche Bank to offer its own insurance programme, while in 2018 Markel’s State National estimated growth in AV use could cause market volumes to slip by up to 40% by 2040.