According to updated research by KPMG, the auto insurance market will shrink by more than 70 percent by 2050 due to autonomous vehicle technology and a rise in on-demand transportation, shifting liability to manufacturers.
KPMG did an updated study called The Chaotic Middle: The Autonomous Vehicle and Disruption in Automobile Insurance that shows an increase in the demand for new types of insurance products with traditional auto insurance carriers facing the threat of obsolescence. Auto manufacturers have become the likely alternative to covering driving risk according to the study.
According to the consulting firm, three major forces are disrupting the current auto insurance marketplace:
- Autonomous Technology – making cars increasingly safer
- Auto Manufacturers (OEMs) – assuming more of the driving risk and associated liability
- Mobility-On-Demand – quickly translating into the need for less personal auto coverage
KPMG believes that all of this means that auto insurance carriers need to act now. “Insurance companies will have to make important strategic and tactical changes sooner than anticipated to navigate through this turbulent transformation of the industry,” said Jerry Albright, principal in KPMG’s Actuarial and Insurance Risk practice.
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