Fitch Predicts 10-Year Delay for Autonomous Vehicles to Affect Insurance Industry

Fitch Ratings has recently stated that it does not anticipate autonomous vehicles (AVs) to significantly impact insurers within the next decade. As a result, the effects on credit ratings are expected to be modest.

However, as time progresses, the technology is poised to “indelibly alter” the landscapes of both the insurance and legal industries, according to Senior Director Gerry Glombicki. He emphasizes that while AVs have advanced beyond mere proof of concept, their widespread adoption will require considerable time due to several factors, including high costs, regulatory fragmentation, and consumer preferences. Notably, the average age of vehicles in the U.S. is nearly 13 years, indicating that a complete turnover of the fleet will take time.

Currently, only a small percentage of vehicles on the road are equipped with high- or full-driving automation capabilities. Those that are in operation have demonstrated a reduction in both the frequency of accidents and the severity of bodily injuries. However, when repairs are necessary following an incident, the associated costs can be significantly higher.

Fitch also points out that AVs introduce a level of coverage confusion. Claims become increasingly complex, with product liability extending to manufacturers, designers, and suppliers. Vehicle owners may also find themselves sharing liability in certain situations.

“The absence of established legal precedent heightens risk, leaving liability and coverage decisions vulnerable to volatility,” Fitch noted. This uncertainty can complicate the claims process and create challenges for insurers.

Moreover, AVs raise cybersecurity concerns and other operational disruptions, as evidenced by Waymo’s recent shutdown during a power outage in San Francisco. Such incidents highlight the vulnerabilities that come with integrating advanced technology into everyday transportation.

On the regulatory front, there are currently no federal statutes governing AVs. Lawmakers are actively discussing the issue, but the conversation is complicated by data privacy concerns and the fact that states maintain control over vehicle operation within their jurisdictions.

Related: Safety, State Involvement Should Be Central to AV Regulation, Says Trades

Topics
Carriers

Fitch Ratings has recently stated that it does not anticipate autonomous vehicles (AVs) to significantly impact insurers within the next decade. As a result, the effects on credit ratings are expected to be modest.

However, as time progresses, the technology is poised to “indelibly alter” the landscapes of both the insurance and legal industries, according to Senior Director Gerry Glombicki. He emphasizes that while AVs have advanced beyond mere proof of concept, their widespread adoption will require considerable time due to several factors, including high costs, regulatory fragmentation, and consumer preferences. Notably, the average age of vehicles in the U.S. is nearly 13 years, indicating that a complete turnover of the fleet will take time.

Currently, only a small percentage of vehicles on the road are equipped with high- or full-driving automation capabilities. Those that are in operation have demonstrated a reduction in both the frequency of accidents and the severity of bodily injuries. However, when repairs are necessary following an incident, the associated costs can be significantly higher.

Fitch also points out that AVs introduce a level of coverage confusion. Claims become increasingly complex, with product liability extending to manufacturers, designers, and suppliers. Vehicle owners may also find themselves sharing liability in certain situations.

“The absence of established legal precedent heightens risk, leaving liability and coverage decisions vulnerable to volatility,” Fitch noted. This uncertainty can complicate the claims process and create challenges for insurers.

Moreover, AVs raise cybersecurity concerns and other operational disruptions, as evidenced by Waymo’s recent shutdown during a power outage in San Francisco. Such incidents highlight the vulnerabilities that come with integrating advanced technology into everyday transportation.

On the regulatory front, there are currently no federal statutes governing AVs. Lawmakers are actively discussing the issue, but the conversation is complicated by data privacy concerns and the fact that states maintain control over vehicle operation within their jurisdictions.

Related: Safety, State Involvement Should Be Central to AV Regulation, Says Trades

Topics
Carriers