Best's Review



From the Editor's Desk
Warning Signs

Auto insurers face hard questions about their business models in an era where new technology may lead to a smaller market with fewer drivers.
  • Patricia Vowinkel
  • October 2018
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Self-driving cars, new vehicle safety systems and other transportation trends may be about to put a dent in the U.S. auto insurance industry's premiums. With fewer accidents and more drivers off the road, many expect an eventual decline in auto insurance premiums.

In “Detour,” Best's Review looks at what these trends mean for the business models of insurers that depend heavily on auto insurance premiums.

“Over time, autonomous vehicles and vehicle safety systems will reduce the number of crashes and at that point in time also reduce the value of and the amount of people who pay for insurance as we know it today,” said Teresa Scharn, associate vice president of product development for Nationwide's personal lines.

The impact of that could be significant.

Auto insurance is a huge business with about $231 billion in U.S. private passenger auto direct premiums written in 2017, according to A.M. Best data. That represents about 36% of the overall U.S. property/casualty direct premiums written.

“If you believe that this technology is really going to effectively de-risk the industry, we're going to have 94% of accidents conceptually be eliminated, which will draw up to 40% of the total industry's premiums away. Pretty dramatic,” said Mike Stankard, automotive practice leader at Aon, speaking earlier this year at Philly I-Day.

Best's Review dug into the A.M. Best data and identified insurers that derive most of their overall direct premiums written from their auto insurance business. A list of insurers that have at least 50% of their overall business in auto insurance begins on page 57.

October is Auto Insurance Awareness Month. The October issue also includes A.M. Best's exclusive ranking of the top U.S. auto writers.

New technology is driving change, not only in auto insurance business, but in the industry at large. For years, the industry has talked about the need to bring down expenses. In “Shifting Expenses,” Best's Review looks at the issue of expense management and finds that as the old adage goes, sometimes you have to spend money to save money.

Hurricanes, earthquakes, terrorism, cyberattacks. These events can cost lives and wreak havoc on businesses and yet many times senior executives fail to prepare their companies adequately, thinking that “it won't happen to us.” In “On the Agenda,” Best's Review speaks with Howard Kunreuther and Michael Useem about their new book Mastering Catastrophic Risk and how companies need to be unsurprised by surprise.

In “The End Draws Near,” Best's Review speaks with a panel of experts on life/health asset management about the late stage of the current economic cycle.

Finally, Best's Review is now available online in a new reader-friendly format. Go to to read and share these articles and other Best's Review content.

Patricia Vowinkel, Executive Editor

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