Motor insurance profits could come under pressure from the development of automated cars, according to observations by KPMG and Standard & Poor.

S&P has produced a report on the impact of automation in which it says insurance costs to the consumer will reduce as the automated car leads to fewer and less severe claims.

KPMG estimates that by 2040 the personal motor insurance sector could shrink to less than 40% of its current size.

S&P expects the declining trend of serious road traffic accidents to continue, reports the Financial Times, which also quotes Thatcham, the motor insurance research organisation, as saying autonomous braking has already led to a 40% drop in personal injury claims.

Thatcham also said that over the next two to three decades there will be a shift from personal liability for road accidents to product liability.