AI Disruption Looms for Auto Insurers

Two major insurance stocks, Progressive and Allstate, could be hit hard as self-driving cars become more common.

Published on Feb. 26, 2026

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According to a new report from BMO Capital Markets, the rise of autonomous vehicles could significantly reduce the total addressable market for personal auto insurance by as much as 4% annually over the next decade. This is bad news for insurance giants like Progressive and Allstate, which derive over 90% and 66% of their premiums from auto coverage respectively. The analyst warns that lower estimated terminal growth rates for the auto insurance industry could drive material declines in stock valuations and multiples for these companies.

Why it matters

The shift towards self-driving cars is expected to dramatically reduce accident rates, which could severely impact the auto insurance industry. This poses a major threat to the business models and profitability of major insurers like Progressive and Allstate that are heavily reliant on personal auto coverage.

The details

BMO Capital Markets analyst Michael Zaremski estimates the total addressable market for personal auto insurance could peak around 2040 at $560 billion, and then decline by about 4% annually over the following decade. This is due to the rise of autonomous vehicles, which are projected to reduce accidents by 75-90%. Even current advanced driver-assistance systems can lower collision rates by up to 40%. While this disruption is still years away, Zaremski warns that the impact on insurer valuations and multiples is already being "embedded" by investors.

  • The total addressable market for personal auto insurance is expected to peak around 2040.
  • Over the following decade after 2040, the personal auto insurance market is projected to decline by about 4% annually.

The players

Progressive

A major U.S. auto insurance company that derives over 90% of its insurance premiums from personal auto coverage, making it highly exposed to the threat of autonomous vehicles.

Allstate

Another major U.S. auto insurance provider, with two-thirds of its insurance premiums tied to personal auto coverage, putting it at risk from the disruption of self-driving cars.

BMO Capital Markets

A financial services firm that published a report warning of the potential impact of autonomous vehicles on the auto insurance industry, particularly for major insurers like Progressive and Allstate.

Michael Zaremski

An analyst at BMO Capital Markets who authored the report on the threat of autonomous vehicles to auto insurers.

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What they’re saying

“We're cognizant that lower estimated terminal growth rates can drive material declines in stock valuations/multiples.”

— Michael Zaremski, Analyst (BMO Capital Markets)

What’s next

The analyst expects the impact of autonomous vehicles on the auto insurance industry to play out over the next two decades, with the total addressable market peaking around 2040 and then declining by 4% annually in the following years.

The takeaway

The rise of self-driving cars poses a major threat to the business models of auto insurance giants like Progressive and Allstate, which derive the majority of their premiums from personal auto coverage. This disruption could lead to material declines in the valuations and stock prices of these insurers as the total addressable market shrinks in the coming decades.