autonomous vehicles

UK Motor Insurance Premium & Profit Profile

Autonomous Research has projected the UK motor insurance premium and profit profile in the period 2015-2060. Our estimates indicate that premiums will see an annual 1.5% rise leading up to 2025 with the current 20% return on capital (ROC) shrinking to a more sustainable 10%. This is reflected by the sharper fall in profits in the period 2015-2025. In our view, 2025 will be the pivotal point for motor insurers as self-driving cars take hold and premiums fall by nearly two-thirds by 2060. Unsurprisingly, profits are also expected to fall in this period; however we do not assume a slash in profitability with ROC remaining roughly constant at 10%.

New Vehicle Sales Forecast From 2005 To 2025

Autonomous Research estimates that nearly two-thirds of new car sales will take place in emerging markets (EM) by 2025. Our forecast shows new vehicle sales in (1) Developed markets, (2) EM (China/India), and (3) EM (Other).  The rise of the car-sharing economy (among other factors) in developed markets has resulted in shrinking vehicle sales from 44 million in 2005 to a projected 39 million in 2025. Meanwhile, lower purchase prices and falling operating costs are pushing vehicle sales in emerging markets, from a combined 22 million in 2005 to a projected 68 million in 2025. This growth will be particularly visible in China and India where the rise in sales is estimated from 7 million in 2005 to 41 million in 2025.

Changes in Road Accidents in Developed Markets

Autonomous Research has analysed the trend in driving fatalities and injury crashes in developed markets over a 25 year period. Our research suggests that fatalities decreased -19% in 1990-2000 and a further -38% in 2000-2012. This can be attributed to increased government action and technological advances in the developed world aimed at preventing deaths in car accidents. On the other hand, injury crashes increased by 5% in 1990-2000 and sharply decreased in 2000-2012 at a rate of -24%. The fall in crashes is associated with a shift in technological advances, starting in 2000, targeted at limiting the number of crashes as opposed to fatalities. This was accompanied by a modest increase of 8% in miles driven during this period due to a fall in average mileage per car. As a result, roads continue to become safer (on average) in the developed world.