US motor insurance premiums may fall more than 40% by 2050 on conservative estimates, according to Aon Benfield’s annual Global Insurance Market Opportunities report.

Personal motor accounts for 47% of global insurance premium, and “without this ballast and implicit capital subsidy” US property and casualty volatility will increase by 40%, it says.

Aon Benfield predicts it will take about 30 years for the commercial adoption of driverless cars.

Even at this moderate pace, US motor premiums could drop 20% by 2035.

The first commercially available automated vehicle is expected to hit the road in 2018, and Aon Benfield forecasts an 81% reduction in claims frequency will follow.

However, the severity of claims will probably rise due to increased sensor costs – with these devices currently located on autonomous cars’ bumpers – and the higher cost of handling product liability claims.

Aon Analytics CEO Paul Mang says while the adoption of autonomous vehicles depends on variables such as regulators, cost and technology, insurers should not be complacent.

“We, as an industry, need to act quickly to ensure we have the products available to align to the new paradigm; if we fail to do so, we only invite disruption,” he said.

The report says autonomous vehicles “may have an insurance upside”, because the decline in personal motor premiums may be partially offset by a rise in premiums from manufacturers and the technology companies on whose networks the vehicles operate.

In the report, software developer nuTonomy’s COO Doug Parker says self-driving “mobility on demand” or taxis will become the preferred mode of transport, eventually negating private ownership.

“In the future, I think people will wonder why we even allowed people, in the not too distant past, to drive around in two-tonne metal boxes at speeds of 60-plus miles per hour.”