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Allstate CEO: Fewer accidents, higher claims costs with self-driving tech

Allstate Corp. has seen fewer accidents but higher repair costs in claims involving autonomous driving technology, according to Chairman, President and CEO Thomas Wilson.

The car and insurance industries anticipate that self-driving technology will push driving accidents down and reduce the need for insurance coverage, Wilson said during a presentation at the Goldman Sachs U.S. Financial Services Conference. But while the use of autonomous driving-related technology such as sensors, lane stabilization and automatic braking results in fewer accidents, the parts associated with capabilities make accidents more expensive, Wilson said.

Allstate assumed that along with a decline in frequency, claims severity, or average cost per claim, would not go up as much. However, the insurer has found that manufacturers are building cheaper cars, but with more expensive parts, Wilson said.

The cost of one vehicle model Wilson did not name went up 2% in a recent year, while the cost of repairing the car increased 7%.

"That's actually [made] insurance premiums go up," he said.

Down the road, trends could shift insurance businesses into other directions, Wilson suggested. Allstate has prepared for that possibility by developing other personal lines of business like identity protection, insurance for personal electronic devices and home insurance, which could see an uptick in business with more severe weather.

Allstate could also leverage the data it gathers from Arity LLC, its auto data and analytics subsidiary, which gathers driving information to help rideshare, car-share and on-demand delivery businesses manage risk, Wilson said.

"We think that we'll be able to use our customer connections to build our connected car business," he said.