New Auto Safety Technology: A Savings, or Not?

Accidents down, repair costs up.
New Auto Safety Technology: A Savings, or Not?
July 31, 2019

Advanced driver assistance systems (ADAS) are increasingly being rolled out by automakers to help drivers avoid crashes, but insurance companies are cautious about offering discounts to drivers who buy cars with collision-avoiding brakes or automated cruise control.

Swiss Re and mapping company HERE say that ADAS has the potential to reduce motor accident frequencies by up to 25 percent, cutting global insurance premiums for fully ADAS-equipped cars by $20 billion by 2020. U.S. insurers say they do not have sufficient data to validate auto industry promises of safety benefits from ADAS.

“There’s no such thing as a $300 bumper anymore. It's closer to $1,500 in repair costs nowadays,” said Richard Lavey from The Hanover Insurance Group. National Association of Insurance Commissioners (NAIC) data show that personal auto insurance, while traditionally a low-margin business, provides the largest amount of liquidity to insurers, generating more than $244 billion in 2018 direct premiums in the United States alone. However, that could change as the number of accidents decline and offset higher repair costs, but some experts warn lower premiums could result in temporary liquidity problems for the insurance sector in about ten years.


Navigate in this section: