Auto insurance trends and emerging risks in 2026 and beyond

Electrified powertrains are contributing to a steady rise in vehicle mass. In North America, strong demand for utilities and pickups, combined with the widespread use of large-format batteries, is increasing the average weight of new vehicles across the market.

Average new-vehicle weight is projected to exceed 4,600 lb by 2026, reflecting a mix shift toward utilities and electrified drivetrains.

A heavier fleet has direct implications for auto insurance. Greater mass alters accident dynamics, raising the likelihood of more severe impacts even at lower speeds. Repair costs are also rising, particularly when high-voltage systems or integrated safety components are damaged.

At the same time, the growing presence of advanced driver-assistance systems (ADAS) that help prevent crashes is adding new cost layers. Replacing or recalibrating sensors, cameras, and radar modules can turn minor collisions into major repairs.

The result is a widening gap between frequency and severity. Crashes are less common, but when they occur, they are more expensive. Insurers will need to recalibrate assumptions about repair costs and loss ratios to maintain profitability in this high-complexity environment—especially for insurance for electric vehicles, which involves specialized components and costly repairs. 

Vehicle automation is progressing steadily, though in a more incremental way than early forecasts suggested. The future of autonomous vehicles is no longer seen as a rapid leap to full autonomy. Instead, the market is advancing through enhancements to existing safety and driver-assistance systems.

Taking a step back, regional dynamics reveal important differences in how these technologies are evolving. There’s a shift in focus across the supply chain — particularly toward China — as well as in the United States and Europe, which remain well-established technology markets. These differences underscore how local regulation, manufacturing ecosystems, and consumer adoption rates shape the pace of automation globally.

Level 2 and Level 2 Plus driver-assistance technologies—where vehicles manage steering and speed but drivers remain responsible for supervision—are now common across new-vehicle line-ups worldwide. Level 2+, in particular, represents the majority of current system deployment and is expanding rapidly—expected to account for roughly one-third of new-vehicle sales within the next decade. These systems are increasingly available beyond premium segments, supported by regulatory pressure for enhanced safety features.

By 2035, roughly 40% of global new-vehicle sales will feature Level 2+ to Level 4 automation, driven by OEM standardization and NCAP protocols. Levels 3 and 4 remain niche due to high cost and narrow operating domains.

Electrification and automation are only part of the transformation. The next wave of change lies in software-defined vehicle design, which brings new challenges for automotive insurance providers.

Modern vehicle architectures rely on standardized hardware platforms, with most functionality controlled by software and frequently updated over the air. Capabilities such as lane-keeping, adaptive cruise control, and energy-management systems can be activated or modified after purchase.

For insurers, this introduces a new dimension of risk. Two vehicles that appear identical on paper may perform differently depending on their software configuration. This variation affects performance, safety, repair procedures, and even replacement-part compatibility.

Artificial intelligence adds further uncertainty. Algorithms that govern perception and decision-making can evolve with each software update, producing results that are difficult to replicate or predict. As vehicles become more intelligent, transparency and validation will play a greater role in risk assessment and claims handling, creating a new frontier for auto insurance risk modeling. 

Auto insurance has traditionally been one of the most stable segments of the property and casualty market, but the cost dynamics of new technology are testing that stability.

Claims frequency continues to decline thanks to improved safety systems and changing driving behavior, yet severity remains high. Advanced materials, specialized labor, and supply chain constraints are driving repair costs upward. In commercial auto, litigation trends and large jury verdicts add further pressure.

Despite strong overall margins in private auto, some insurers are experiencing higher loss-cost inflation, particularly for electric vehicles. American National Property & Casualty Co., for example, has added select Tesla, Rivian, Polestar, Lucid, and Fisker models to its “high-risk” list due to higher and more severe claims compared with traditional vehicles.