Motor insurers will need to overhaul their business models to remain relevant in the coming decades, executives and consultants said on Wednesday, after driverless cars were given the green light to drive on British roads from January.
Vince Cable, business secretary, launched a £10m competition for up to three cities to bid as locations for trials and announced a review of road regulations.
The trials are expected to start in January 2015 and last between 18 and 36 months.
Britain is not the first country to allow driverless cars. Several US states including California already permit them. David Raistrick, an automotive specialist from Deloitte UK, said regional cities such as Birmingham, Leeds or Milton Keynes would be ideal UK test locations.
He added, “We will not see a sudden glut of driverless cars on the roads . . . Putting a car on the road is the easy part – getting the technology at the right price so people can afford to buy one will be more difficult.”
However, some in the motor insurance industry, which writes £16bn of premiums a year, went as far as to argue the technology poses an existential threat to traditional car insurers because of expected improvements in road safety.