Goldman Sachs "Autonomous Driving" in-depth report: Auto insurance will undergo significant changes, with accident frequency, claims distribution, and legal liability all changing

With the acceleration of autonomous driving technology, the auto insurance industry may face structural changes.

According to news from the Chasing Wind Trading Desk, Goldman Sachs analyst Mark Delaney and his team recently released a research report stating that autonomous driving technology has moved from the proof-of-concept stage to the commercialization stage, and is expected to create significant profit pools in three major areas: shared mobility, freight, and insurance.

Wall Street Insight previously mentioned that the report believes North America's Robotaxi has officially entered the commercialization stage, with an imminent explosion in the shared mobility market. It is expected that by 2030, the U.S. autonomous driving shared mobility market will reach $7 billion, accounting for 8% of the total market.

In this process, the global auto insurance market, worth over $400 billion, will face disruptive changes due to a decrease in accident frequency, accompanied by shifts in claims distribution and legal liability.

Auto Insurance Market to Continue Short-Term Growth, Faces Structural Adjustment Long-Term

The Goldman Sachs report points out that the U.S. auto insurance market is valued at $432 billion, accounting for 41% of the property and casualty insurance market.

The report believes that despite the gradual penetration of autonomous driving technology, the insurance market will still maintain moderate real growth over the next 10-15 years. Growth drivers include an increase in the number of vehicles and a continuous rise in claims costs (above inflation levels), partially offset by a decrease in accident frequency.

However, in the long term, the report states that autonomous driving technology may significantly reduce accident frequency, especially accidents caused by human error. This will shift insurance products from "frequency-driven" to "severity-driven" (i.e., fewer accidents but higher costs per accident).

Technological Advances Reduce Accident Rates but Increase Claims Complexity

The report shows that currently, Advanced Driver Assistance Systems (ADAS) have begun to reduce accident frequency. For example, Level 2 technologies (such as automatic emergency braking) can reduce collision accident frequency by 14.4% and bodily injury accident frequency by 23.2%.

Waymo's data further indicates that its vehicles have an accident rate that is 83% lower (airbag deployment accidents) and 81% lower (injury accidents) than human drivers in San Francisco and Phoenix.

However, the complexity of the technology has driven up repair costs. For instance, vehicles equipped with ADAS have significantly higher repair or replacement costs after an accident, leading to a continuous rise in claims severity (cost per accident) above inflation levels.

Legal Liability Shifts from Individuals to Technology Providers

As autonomous driving technology penetrates the auto insurance field, the distribution of legal liability may shift from individuals to manufacturers or technology providers.

This shift could change the allocation of claims costs between physical damage insurance and liability insurance, prompting insurance products to transition towards product liability insurance and cybersecurity insurance.

The report notes that existing insurance companies may fall behind in future competition if they do not proactively develop relevant capabilities; meanwhile, automotive manufacturers (OEMs) such as Tesla, General Motors (GM), and Rivian have begun to venture into the insurance business, attempting to grab a share of the market, but they need to prove their underwriting capabilities For example, Tesla has provided insurance services in 12 states, with insurance business revenue of approximately $317 million in 2024, but the underwriting profit margin is still below the industry average