The rollout of autonomous vehicles over the next few decades could lead to a massive reduction in U.S. motor vehicle premiums in the coming years, Aon Benfield said in a new report.

Expectations are that “industry pure premiums” will drop 20 percent under their 2015 levels by 2035, even if the technology is adopted at just a moderate pace, Aon Benfield said. Assuming the same moderate trajectory, those premiums could plunge by more than 40 percent if full adoption of autonomous vehicles takes place, as expected, by 2050.

The prediction assumes a number of variables. As Aon Benfield noted, the prediction of premium reduction dovetails with an envisioned 81 percent drop in claims frequency over time, after the first commercially available autonomous vehicle technology hits the road in 2018.

There’s also an assumption of higher claims severity behind those numbers, because of sensor costs and greater cost of handling product liability claims. Aon Benfield explains in its report that autonomous vehicle sensors currently go on vehicle bumpers, a practice that leaves them the first thing to get damaged if an accident hits.

As well, accident liability is expected to shift from the vehicle driver to “the future operator of the autonomous vehicle fleet.”

Aon Benfield said it bases its predictions for self-driving technology adoption on historical precedent for other modes of transportation.

“Cars took approximately 80 years from the date of the first commercial availability to reach 90 percent adoption, air travel took approximately 60 years, mobile phones 30 years while smart phones have taken only 10 years,” the Aon Benfield report noted.

Based on those numbers, its prediction for adoption of self-driving technology over the next 30 years (and resulting premium shifts) is very much “a middle-of-the-road” approach, Aon Benfield said. The report said that this timeframe “is consistent with the historical adoption of safety features in personal vehicles.”

Aon Benfield’s findings are part of its annual Global Insurance Market Opportunities report, which came out on Sept. 2016 as part of this year’s Monte Carlo Rendez-Vous gathering.

Source: Aon Benfield