Insurers need to start figuring out how to provide cover for autonomous vehicles, which are rapidly growing closer to becoming mainstream, according to a new report.

Barry.Nilsson Lawyers says industry regulations and the wider legislative landscape are not keeping pace with the changes in driverless technologies.

“The current approach to the insurance of motor vehicles will need to be completely revised,” Principal Henry Silvester says in the report.

“From an insurance perspective, a whole new business model needs to be considered if the driverless vehicle lives up to the promise of removing over 90% of collisions.”

He says laws also need to “catch up with the rapid pace of technological change.”

Insurers need to rethink the compulsory third party (CTP) model because present-day policies may be made obsolete by driverless vehicles.

“Risk will be significantly reduced, as will the appetite for consumers to pay the current levels of premiums for CTP,” Mr Silvester says.

“Such policies may not even be in demand at all, although in the transition phase there no doubt will be demand.

“Two things are clear. Driverless vehicles are here to stay, and we need to better understand both their risks and benefits.”