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Car insurance premiums tipped to drop as new technology takes over

Impounded Car Insurance UK look at a recent study which has suggested that technology such as driverless cars, improved data collection and more people sharing cars will hammer down the cost of car insurance.

A recent report from the Boston Consult Group and Morgan Stanley has suggested that new technology will ‘dramatically’ drive down how much people are paying for their car insurance worldwide, over the next 25 years.

driverless car insurance

A combination of driverless cars taking over, insurers making better use of data and the fact that more people are beginning to car-share will have a major impact on premiums.

Insurance companies in the developed markets will be the ones that suffer greatest according to the study. In the worst case scenario is predicted that US car insurance market is set to fall from $221bn per year to $74bn by 2040. Here in the UK, it has been predicted that premiums would drop from $24bn (£19.37bn) per year to $6bn (£4.84bn).

Miguel Ortiz who is a senior partner at Boston Consulting Group stated that “The industry won’t feel the heat for the next five years or so but then things will accelerate”.

The study has also predicted that the way car insurance is bought will change. It suggests that commercial buyers will account for around 70% of the market by 2040.

Ortiz said “The potential to self-insure when you have a pool is much higher than it is for individual drivers.” This could mean that commercial buyers with fleets, such as Uber, could insure their own vehicles in the future.

As autonomous vehicles take over our roads, the number of accidents and claims is pegged to drastically reduce which should have a massive knock on effect on the cost of our insurance.

Until driverless vehicles become mainstream though, it looks as though – at least short term – our insurance costs are going to continue to rise. Record numbers of drivers are having their vehicle seized and impounded by the police, meaning that they’ll need an impounded car insurance policy in order to be able to release it.