Advanced Driver-Assistance Systems (ADAS) are expected to have a significant impact on the auto insurance industry, driving near-term frequency changes to the sector, although, autonomous could have greater ramifications longer-term, according to a recent Evercore ISI.
In a recent report, titled ‘US P&C Insurance: The ADAS Impact on Personal Auto Insurance’, Evercore suggests that the increased adoption of ADAS technology will drive a -1% annual decrease in auto insurance loss cost trends.
This could potentially accelerate to a -2% to -3% reduction in total loss cost trends by 2030 as technology improves and its penetration in the US vehicle fleet reaches a “tipping point” of around 50%.
ADAS refers to a suite of technologies designed to enhance vehicle safety through automated detection and avoidance features.
The report estimated that Level 2/2+ ADAS penetration reached 25% in 2024 and is projected to grow to 50% by 2030.
The most impactful features are considered to be Front Automatic Emergency Breaking (FAEB), Forward Collision Warning, Blind Spot Monitoring (BSM), and Rear AEB.
According to the report, the primary impact of ADAS is a reduction in claim frequency. A LexisNexis study from 2024, analysed in the report, found that ADAS-equipped vehicles had lower claim frequencies for Bodily Injury (-24%), Property Damage (-19%), and Collision (-11%) compared to non-ADAS vehicles.
This analysis, based on a 24% ADAS penetration rate in 2025, results in a weighted average frequency decline of -3.1%.
“Specifically, we are more concerned about ADAS technology resulting in declining loss cost trend which could result in higher margins initially but eventually lead to more competition and an auto insurance market that does not naturally grow as fast or potentially shrinks,” analysts stated.
Adding: “We have been increasingly concerned with the favourable claim frequency that the entire auto insurance industry (and broader auto repair ecosystem) has experienced over the last few years as potentially being driven by increased penetration of ADAS.”
While the general belief is that the costlier repairs of ADAS-equipped vehicles would offset the frequency benefit, the report presents mixed evidence.
The LexisNexis study, for example, found that ADAS had no impact on Bodily Injury severity, but actually resulted in a slight decrease in Property Damage (-1%) and Collision (-3%) severity.
This could be due to the technology reducing a vehicle’s speed before impact or helping to avoid head-on collisions.
However, Evercore also acknowledges that ADAS features might prevent low-dollar incidents, which could lead to an increase in average severity as the remaining claims would be for more costly events.
Overall, the report concludes that ADAS penetration will lead to a -1% per year decrease in total auto insurance loss cost trends.
“We think this could accelerate to a to -2-3% reduction in total loss cost trends as the technology improves and penetration gets closer to the ~50% tipping point by 2030. Thus, we see ADAS penetration shaving 1pt off normal historic loss cost trend of ~4-5% to result in a new trend at 3- 4% (& eventually be dragged down to 1-3%),” Evercore added.
Highlighting: “These scenarios are not as dire for the industry as we were thinking heading in but does suggest lower normalised market growth.”
In the short-term, the report identifies a significant headwind to the industry stemming from recent favourable claim frequency. This is partly attributed to a decline in collision claims, as policyholders are filing claims to avoid rate hikes.
Collision frequency was down 6-10% in 2025, and this trend could reverse in late 2026 as auto insurance price increases moderate or turn negative.
Historically, collision frequency has swung positive one year after a period of moderating auto pricing. This could lead to a faster-than-anticipated margin normalisation for insurers like Progressive and Allstate.
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