Autonomous vehicles and artificial intelligence-driven platforms have yet to materially affect earnings in the motor insurance sector. However, Barclays has warned that equity markets are only beginning to price in the structural risks facing a revenue pool that accounts for 35 to 40 per cent of global property and casualty premiums.
Claudia Gaspari, analyst at Barclays, has published research suggesting that motor insurers may be entering a period of prolonged structural headwinds. Whilst the bank does not anticipate immediate earnings downgrades, the threat is characterised as a slow burn development that could nonetheless constrain investor appetite in a sector already contending with cyclical pricing pressure and subdued earnings per share momentum.
Motor insurance represents the single largest revenue pool within the property and casualty sector globally. Any long term erosion driven by the adoption of autonomous vehicles or the emergence of AI based insurance platforms would therefore have significant implications for the industry.
Barclays does not forecast the demise of retail motor insurers. The bank does, however, argue that being widely perceived as an artificial intelligence loser could trigger a further de rating of between 5 and 25 per cent for more exposed names. This estimate is based on analysis of other sectors where stocks have been categorised as structurally disadvantaged by artificial intelligence developments.
The logic underpinning this view is as much behavioural as fundamental. Investors may not wait for earnings cuts if they believe long term revenue pools are under threat. This debate emerges against a backdrop of mounting cyclical pressures in property and casualty pricing, which accounts for approximately 60 per cent of sector market capitalisation. With limited earnings per share momentum and few short term catalysts, there is little incentive for investors to resist a negative structural narrative.
The UK retail motor market appears most immediately exposed. The market is already cyclical and heavily disintermediated, with pricing under pressure. The legislative framework for autonomous vehicles is relatively advanced, and robotaxis are already being trialled on London streets.
Barclays has flagged Aviva as particularly exposed, noting that around 23 per cent of its profits are derived from personal motor. With limited near term catalysts, that exposure could render the stock vulnerable to further de rating if the artificial intelligence narrative gains traction. Smaller domestic players and insurers reliant on traditional agent distribution models may also face challenges if AI led platforms accelerate price transparency and disintermediation.
In continental Europe, Barclays expects slower adoption of autonomous vehicles. That does not, however, eliminate risk. Margins in European motor have further to fall, the bank believes, and distribution models remain more heavily agent based. That leaves incumbents exposed to platform disruption over time.
Barclays identifies Allianz and Generali as the clearest pan European retail motor proxies among large cap names, both currently rated Underweight. The risk in this region is less about immediate earnings shocks and more about gradual structural compression layered on top of cyclical weakness.
The Nordic region presents a different mix of exposures. Sampo has the highest motor exposure in the Nordics and also owns UK based Hastings, adding cross market sensitivity. Gjensidige derives around 30 per cent of premiums from motor. Norway has the highest electric vehicle penetration in Europe and is relatively advanced in piloting autonomous vehicle legislation, including in the Oslo area.
High electric vehicle penetration does not automatically translate into autonomous disruption. It does, however, reinforce the perception that the region sits closer to the technological frontier, which may influence investor positioning.
The core argument advanced by Barclays is not that earnings are about to collapse. Rather, the bank contends that the insurance sector lacks the growth momentum and catalysts to resist a structural bear case. If investors conclude that artificial intelligence and autonomous vehicles will structurally shrink motor premium pools over time, even gradually, multiples may adjust well before the income statement reflects the change. The implication is that the de rating may have only just begun.
