Insurance Slump—It's All Google's Fault.

There are tectonic changes happening that will eliminate hundreds of thousands of jobs, close factories and have a major effect on the global allocation of capital.

And you can guess from the title of this blog who I’m going to blame.

Google and those crazy autonomous vehicles

For those of us living in the San Francisco Bay area we’re used to sharing our gridlocked roads with fleets of self-driving cars while wishing we had one too. But it raises a question “What might happen when cars don’t crash?”

I’ll start my thoughts from the perspective of the P&C Insurance industry—in which I spent over a decade. In 2011 Bob Joop Goos, chairman of the International Organization for Road Accident Prevention stated, “More than 90 percent of road accidents are caused by human error.” So, what might happen to premiums if that risk were largely removed? Well. They’d fall. A lot.

For us consumers that’s great. There’s nothing like spending less on a product you hope to never use. But. It’s not so good for insurance carriers who generate revenue by investing the float created when you and I pay our bill every month. You see, insurance carriers pump a ton of capital through the markets. In 2013 auto insurance premiums in the US totaled over $207 billion. When a large chunk of that capital moves elsewhere people will notice.

Then there are the insurance brokers (in 2012 there were 443,300 of them) who make a commission from selling policies. You can do the math on that one: lower premiums=fewer brokers.

On the claims side there’s a big, direct supply chain that might substantively collapse. There are about 200,000 US auto claims adjusters and examiners—we won’t need many of those anymore. But that’s just the start.

There are the body shops, the parts and paint manufacturers, the tow companies, the wrecker yards, the car rental companies, the auto industry (3-4 million cars are declared total losses in the US each year—to put that in perspective Ford sold 2,480,942 vehicles in 2014). And all the auto industry suppliers down to the mining conglomerates who dig out the ores to make the metal, and the shippers who move it and the finished product to the dealers.

Then there’s the indirect, or unintended, supply chain that comes along with accidents and injury—the ambulance drivers, roadside safety providers, health care providers, physical and mental therapists, and so on who help those in the aftermath of collisions.

And, perhaps more obscurely, but not inconsequently, the software, technology and consulting companies who serve the insurance carriers and their supply chain will not escape unscathed by The Crashless Age.

You get the idea.

There are a lot of livelihoods involved here. When it comes to people and their cars human error is a huge industry.

The collateral damage from the rise of the self-driving car will be a shrunken insurance market and lower volume throughout its direct and unintended supply chain. Not all insurance carriers will survive, and there will be hurt elsewhere too.

This is not a matter of if, but when. The Crashless Age is nigh. Its inevitable disruption will offer amazing opportunities for those who are prepared to invest in new ventures, initiatives, and options that anticipate the future.

Our point of view: Nobody has better resources to take advantage of those opportunities, nobody can match their talent, their experience, their data, their insight, their channels, or their assets than those already active in the those industries. But it’s going to take a lot of human ingenuity to use those resources in clever, practical, and original ways.

And that’s where we, at Future and mach49, can help.