Fitch Ratings has announced that it does not anticipate autonomous vehicles (AVs) to significantly influence the insurance industry over the next decade. According to Senior Director Gerry Glombicki, any changes to credit ratings during this period will be modest. While the technology has progressed beyond initial proof-of-concept stages, widespread adoption remains a distant goal due to high costs, regulatory hurdles, and consumer preferences.
The current average age of vehicles on U.S. roads is nearly 13 years, indicating that it will take considerable time for the fleet to transition to newer models equipped with AV technology. Presently, only a small percentage of vehicles feature high- or full-driving automation capabilities. Although these AVs have shown a capacity to reduce both the frequency of accidents and the severity of bodily injuries, they also present unique challenges when repairs are necessary. Repair costs following incidents involving AVs tend to be substantially higher.
Fitch highlights that AVs add a layer of complexity to insurance claims. The introduction of product liability claims complicates matters for manufacturers, designers, and suppliers, as vehicle owners may also share some liability. The lack of established legal precedents creates additional risks, leaving liability and coverage decisions vulnerable to fluctuations.
Gerry Glombicki noted that “the absence of established legal precedent heightens risk, leaving liability and coverage decisions vulnerable to volatility.” As insurers grapple with these new challenges, the potential for cybersecurity threats emerges, further complicating the operational landscape. Recently, Waymo experienced a significant disruption when its autonomous vehicles halted operations during a power outage in San Francisco, underscoring the vulnerabilities inherent in AV technology.
On the regulatory front, the absence of federal statutes regarding AVs complicates the landscape. Lawmakers are discussing various issues, which are further complicated by concerns over data privacy and the varying state controls over vehicle operations. This lack of a cohesive regulatory framework adds another layer of uncertainty for insurers and manufacturers alike.
As the industry navigates these complexities, Fitch cautions that the transition to fully autonomous vehicles will be gradual. While the long-term implications for the insurance and legal sectors may be profound, the immediate effects will be limited, providing insurers with a breathing space as they adapt to the evolving landscape of vehicle technology.
