As the largest global motor reinsurer, Swiss Re sees itself as well placed to benefit from anticipated structural changes to the market as the industry prepares to transition to autonomous vehicles, according to Deutsche Bank.
Speaking at Deutsche Bank’s third dbAccess AutoTech day in London, representatives from Swiss Re explained that the transition of the current motor fleet is likely to be a long-term process, allowing it to slowly adapt to the changes.
Swiss Re added that it is also likely to benefit from the rise in ADAS (Advanced driver-assistance systems), which it predicts could reduce accidents on motorways by up to 45%, and on other roads by 27%.
Although a lower frequency of claims would bring down the overall premium level, the slow transition process in advanced markets and ongoing growth in emerging markets suggests that the global market will continue grow and peak between 2030-35 at around US $800 billion in premiums.
Deutsche Bank observed that the potential for disruption in motor insurance is particularly significant given that this line of business accounts for 42% of the global P&C market, or around US $700 billion in premiums.
Also speaking at the AutoTech event, primary insurer Direct Line said that it did not see any significant risk in getting side-lined by OEMs (Original equipment manufacturers), which could seek direct risk coverage by bigger reinsurers or commercial insurers.
However, Deutsche Bank cautioned that autonomous driving may cause market volumes to decline by 20-40% by 2040, and noted that premiums may still be under pressure as clients with advanced ADAS will require higher discounts.
Additionally, it warned that frequency gains might be competed away via premium reductions in a market that is set to remain very competitive, although it also acknowledged that the sector may benefit from emerging risks such as liability and cyber.
Overall, Deutsche Bank considered reinsurers to be better placed than primary insurers in the changing motor environment.
