Self-driving cars are poised to disrupt the $430-billion U.S. auto insurance market, according to Goldman Sachs, as fewer accidents and shifting risks could cut insurance costs by more than half over the next 15 years.
In a research note shared Monday, Goldman analyst Mark Delaney indicated that insurance costs are projected to decline from roughly $0.50 per mile in 2025 to just $0.23 per mile by 2040.
That compression could severely challenge the current economics of the insurance sector.
“Autonomy could significantly reduce the number of auto accidents, particularly those caused by human error,” Delaney stated.
Autonomous Vehicles Threaten Auto Insurance Model, But Industry Has Time To Adjust
The U.S. auto insurance market stands at around $432 billion today, including $360 billion in personal coverage and $72 billion in commercial.
As vehicles become safer and smarter, Goldman sees a major transformation in how risk is priced and how legal liability is assigned.
“The two primary long-term risks to auto insurers, are declines in accident frequency and changes …