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By Jason Douglas 

Self-driving cars may ease congestion on the roads but they could prove a headache for insurers.

That was the conclusion of researchers at the Bank of England, who on Friday published a report with estimates of the likely impact of autonomous vehicles on insurance company earnings.

Motor insurance is a big earner for British underwriters, accounting for some GBP15.6 billion ($19.3 billion) of sales in 2015, according to the central bank. That made insuring drivers against accidents insurance companies' single-largest business line.

Self-driving cars, though, promise to make driving much safer, if their proponents are to be believed. Though that means fewer insurance payouts, it could also lead to a reduction in policy premiums. According to BOE staffers Stefan Claus, Nicholas Silk and Chris Wiltshire, insurers' income from motoring policies could fall by as much as 21% by 2040, assuming autonomous vehicles are introduced only gradually over coming decades.

The paper, published in the BOE's quarterly bulletin of research, highlights a little-studied aspect of the coming revolution on the road. Auto makers including Ford Motor Co. are racing against tech giants such as Google parent Alphabet Inc. and iPhone maker Apple Inc. to bring autonomous vehicles to the streets within a few years.

The BOE paper contained other bad news for the insurance industry, estimating that falling motor insurance income won't be offset by a decline in the capital insurers must build to guard against losses. That is because they will still face claims for bodily injury and must also shoulder the risk of cyberattacks on robot vehicles and the networks they run on, researchers said.

The BOE's purpose in conducting this research was to see if self-driving cars could pose enough risk to insurers' to threaten the stability of the financial system.

The paper did acknowledge that autonomous vehicles promise big benefits for consumers, including improving road safety and expanded leisure time.

Write to Jason Douglas at jason.douglas@wsj.com

(END) Dow Jones Newswires

March 17, 2017 10:21 ET (14:21 GMT)

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