Starting from 2030: How autonomous vehicles will reshape the auto insurance market
A new analysis by the Swiss bank Lombard Odier reveals how autonomous technology will transform vehicle ownership habits and radically alter insurance cost structures.
Autonomous vehicles are expected to trigger a significant shift in the auto insurance industry, compelling companies to adapt their business models to a new reality. This is the conclusion of an analysis by Mauro Carli, a senior equity analyst in insurance and asset management at the Swiss bank Lombard Odier, which specializes in private banking.
The US Department of Transportation categorizes vehicle automation into five levels. Current discussions regarding autonomous vehicles focus primarily on levels 3 to 5, with the fifth level representing a fully autonomous vehicle.
For over a century, auto insurance has been a cornerstone of the global insurance industry. According to Allianz data, global premiums in the general insurance sector totaled approximately 2.3 trillion dollars at the end of 2025. Of this, about 920 billion dollars originated from auto insurance, with roughly 80% coming from private vehicle coverage.
A key driver of this transformation is the potential impact of autonomous vehicles on accident rates. Since human error accounts for more than 90% of accidents, the transition to autonomous driving could significantly reduce the frequency of road incidents.
According to KPMG, the frequency of accidents in the US could drop by about 80% by 2040. The industry estimates that claim costs may decrease by 3% to 6% annually over the coming decades.
However, despite the reduction in accidents, the incidents that do occur are likely to become more expensive. According to Swiss Re, the repair cost for a fully autonomous vehicle is currently 3.4 times higher than that of a non-automated vehicle. For insurers, this presents a complex challenge: fewer accidents, higher claim costs, and a shrinking private insurance market.
The rise of shared transport services and robotaxis may also reduce the necessity of private car ownership. Under Lombard Odier’s base scenario, the global number of vehicles is expected to grow until around 2035, driven by the expanding middle class in emerging markets. Conversely, in developed nations, vehicle ownership may begin to decline as early as 2030.
The bank estimates that the global auto insurance market will stabilize between 2035 and 2040, followed by a continuous decline through 2050.
Liability for accidents is also set to evolve. As autonomous vehicles become more prevalent, legal responsibility may gradually shift from drivers to vehicle manufacturers and software providers. Consequently, insurance costs may be integrated into the vehicle's purchase price, and collaborations between automakers and insurance firms are expected to increase.
