The uptake of mainly driverless and fully driverless vehicles is a lot further away than people have been led to believe, according to research by Insurance Australia Group (IAG).
IAG is forecasting not much in the way of driverless vehicle uptake in Australia until 2030. It says the penetration of mainly driverless cars will reach only 20% of the total vehicle fleet by 2035, reports The Australian Financial Review. IAG's work suggests that by 2040 mainly driverless vehicles will account for 48% of cars on the road and fully driverless vehicles will be 14% of cars on the road.
The in-depth research was overseen by Mr David Harrington, who is IAG's group executive of strategy and corporate development. He says one of the barriers in the way of mass adoption of autonomous vehicles is the cost of installing automation systems. Much of this cost is the computer coding involved. A fully autonomous vehicle requires more software code than a typical passenger jet plane.
However, the single most important barrier is the co-ordination of regulations required among state governments. Mr Harrington says 700 separate laws and regulations must be changed to allow the transition to fully driverless vehicles.
The research indicates that the motor insurance market will grow solidly through to 2030 and beyond, but the mix of business will change with the growth in the use of shared vehicles will mean a much higher proportion of insurance will be commercial motor insurance. This earns much lower margins than personal motor insurance.
The shift to autonomous vehicles will have significant impacts on the broader economy given the heavy social cost to Australia from the use of motor vehicles.
It is estimated that motor vehicles cost the economy about A$40 billion a year and this figure includes smashes, smash repairs, regulations and hospital costs following accidents.
The uptake of autonomous vehicles could accelerate much faster if there is government intervention, which has happened in other countries, most notably China.
There are currently about 18 million cars on Australia roads with an average age of about 10 years. IAG sources 40% of its A$8.5 billion (US$6.6 billion) annual premium income from motor vehicle owners. IAG is the only general insurer in Australia with its own research centre testing advanced driver assistance systems. Also, IAG is collaborating with original equipment manufacturers (OEMs) to include such systems in cars.