KPMG’s insurance practice group took a deep dive into the subject of autonomous vehicles, the topic du jour in the Motor City, and highlights some interesting findings in its survey report. KPMG’s report discusses the likely impact these vehicles of the not-so-distant-future will have on OEMs, suppliers, insurance companies, law firms and drivers themselves.
Buckle your seat belt because this is going to be a BIG change. And it’s likely coming faster than most of us expect or are ready to handle.
Most experts agree that the introduction of autonomous vehicles will be the biggest change to the auto industry since the invention of the car itself. Think of the massive amount of new technology that will go into the vehicles, the infrastructure needs, and the insurance, legal and regulatory changes that will be required.
KPMG’s report notes that more than 90 percent of auto accidents today are caused by driver error and projects that by 2040, when the auto stock has either been entirely replaced or retrofitted with autonomous technology, accident frequency could drop by 80 percent! Because of all the new technology and added cost of vehicles, however, the cost of repairs from accidents is projected to more than double.
Interestingly, nearly 70 percent of the respondents in KPMG’s survey, all insurance industry executives, say that the legal industry will have the biggest role and direct impact in determining fault when accidents do occur. Only 39 percent suggest that role will fall to state and federal regulators (multiple responses were allowed).
Despite all the press about autonomous vehicles, though, 74 percent of KPMG’s survey respondents said they don’t think their companies are prepared for the coming changes. Moreover, 61 percent are not making any investment in planning for the change and 32 percent say their companies have “done nothing” to get prepared (multiple responses were allowed). The lack of action is likely due to a fear of early adoption, with 84 percent of the survey respondents believing that autonomous vehicles won’t significantly impact business until 2025. But with 2025 being less than a decade away, will it be too late to react?
The OEMs and technology companies are pedal-to-the-metal on development of their respective autonomous vehicle technologies. There’s no question that autonomous vehicles are coming and little disagreement that they are coming fast. So the question is, if your company is involved with the auto industry, what’s your company’s exposure? What are the challenges? What’s your plan to work with your current clients and partners and what’s your strategy to uncover new opportunities? How aware and ready is your staff to handle the coming change?
Every company that supports the auto industry, either directly or indirectly needs to be working just as hard and just as fast as the leading OEMs and technology companies. It’s the only way to stay ahead of the curve.
