In today’s world, change is inevitable, especially as technology quickly changes how we live and work. So, it’s not surprising that an auto insurance market research analyst is predicting the end of the auto insurance business as we currently know it.

That’s right. No more auto insurance.

Why? According to Deutsche Bank research analyst Joshua Shanker, in 20 years, instead of people owning and driving cars, it’s possible that self-driving and ride-sharing companies make up the majority of the automotive market. As such, the companies behind these services will be able to insure their cars like any other product, not based on the driving habits of millions of different drivers.

In a July 19 research note about auto insurer Progressive, Shanker wrote that self-driving cars and ridesharing are “disruptive technologies” that will likely influence how auto insurance is sold. He went on to predict an “accident-free” future where it becomes difficult to charge for premiums or differentiate among drivers.

Beginning of a state of disruption for the auto insurance industry

The analyst downgraded Progressive, citing underlying fundamentals for the company, but also predicted that new technology will make Progressive’s primary auto insurance business passé. The market research note acknowledged that Progressive may find its way to dominating a new kind of auto insurance world, but noted that the insurer also may find its products completely unnecessary by 2030.

“Over the long term, we believe technological change in driving behaviors represents a massive threat to the personal auto insurance market,” wrote Shanker. “The concurrent rise of instant ridesharing and autonomous vehicles presents real questions as to whether there will even be an auto insurance industry as we know it in 20 years, what percentage of cars on the road will be essentially accident-free in 10 years and whether to acknowledge in just 5 years that this isn’t some ‘George Jetson’ fantasy.”

3 key changes coming

Three probable outcomes arising from the current trends in auto insurance were listed in the analyst’s note as key to their conclusions:

1. Accident frequency will decline to where the difference among driving behaviors becomes negligible and it is difficult to charge a meaningful premium for insurance.

2. Insurance will take the form of commercial product liability instead of personal driver liability as we let the robots do the driving.

3. Vehicle utilization will rise and cars on the road will decline as one car can serve the driving needs of multiple travelers per day, which, in-turn, means fewer cars.

A new kind of auto insurance market

Of course, the auto industry has always had to adapt to changes. In fact, based on new vehicle technology and other improvements, the number of auto accidents have been declining for some time.

Bob Passmore, Assistant Vice President of Personal Lines, for the Property Casualty Insurers Association of America (PCI), says: “The auto insurance industry is constantly looking to adapt to the needs of the industry and cusumers. While it remains to be seen how claims will shake out with the new disruptive technologies, vehicle insurance will still be needed for a very long time. In the future, for example, the risk and premiums could be less about the driver or occupants and more about the software or particular vehicle.”

While arguing that the concerns regarding auto insurance are well-known to the industry, the analyst concluded that it’s a possibility that Progressive could dominate a new kind of auto insurance market, but indicated it’s more likely new entrants in the market “may grasp the winds of change faster than the incumbents.”

Originally published Jul 30, 2015 | By Jayleen R. Heft, on