The current buzz word within the insurance industry is telematics. Yet only around 2% of policies sold in the entire UK are telematics based. There are many reasons reasons for this the three obvious ones are:

1. IT systems needed to support telematics
2. Cheap motor insurance premiums are already being enjoyed (though not for youngsters, granted and )– average premiums fell 14.1% last year, according to the AA. and
3. There is very much a feel of “big brother”.

This makes it very hard for insurers to pitch the potential savings of telematics systems to consumers already enjoying cheaper motor insurance. Professional drivers such as Taxi drivers, couriers and haulage contractors understand the need from a different perspective as this mitigates their attritional fleet claims experience thereby giving cheap minicab insurance or cheap taxi insurance in the long term.

The question is, what will happen to the motor insurance industry when the next revolution looms? The driverless car is coming. General Motors, Audi, Honda, Hyuindai and BMW to name but a few were all exhibiting various prototypes of the automated, connected car at the Consumer Electronics Show in Las Vegas in January. They are partnering with the world’s technology behemoths – Apple, Microsoft and Google – to develop ultra-safe intelligent cars that have the potential to get passengers from A to B without a driver, without ever having an accident and without getting stuck in a traffic jam!

This is not the stuff of Hollywood – these cars could be on the road sooner than we think. According to forecasts published at the end of last year by IHS Automotive, driverless vehicles – cars that can drive with ‘no attention needed by the driver’ – will account for 9% of global car sales by the mid-2030s. The firm expects the first vehicles to be available by the middle of the next decade, and predicts 230 000 self-driving cars will be sold in 2025 – about 0.2% of the 115m cars expected to be sold worldwide that year. The implications for the insurance industry are profound to say the least.

For most insurers, they are not daft – it is not a case of ‘if’ driverless vehicles will turn the market on its head, but ‘how quickly’? , Mike Brockman, chief executive of specialist telematics insurer Insure The Box says “I view the anti-collision technologies and driverless cars as far more groundbreaking than telematics”. “I have been in the motor insurance market for 33 years, but within the next 33 years insurance might not exist in its current form. The thought processes just aren’t in place to understand the impact this is going to have,” he continues.
very prediction over the last decade has turned out to be wrong,” he says.

Recent research by technology consultants Celent suggested the average motor insurance premiums could be cut by 60% by as soon as the middle of the next decade. In a sector that has barely made any money for a generation, and one that is saddled with expensive legacy IT systems, this could produce unsustainable pressures and could well see drivers trying to compare taxi insurance or compare minicab insurance in a completely different way.