With the rapid advancement of autonomous vehicles, traditional personal auto insurance has the potential to be severely disrupted by new competition and shifts to other types of insurance coverage.
The move to new business models will not be smooth, according to a June report from KPMG entitled, “The chaotic middle: The autonomous vehicle and disruption in automobile insurance.”
Autonomous vehicle technology could shrink the auto insurance sector by 71% — or $137 billion — by 2050, according to the report. As such, the core business model for traditional auto insurance carriers may be under threat of obsolescence, and manufacturers have the potential to be a viable alternative to cover driving risk.
Therefore, insurance companies need to be proactive rather than reactive, Joe Schneider, one of the authors of the report, told Auto Finance News.
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