Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

AUTO INSURANCE IS SHIFTING GEARS, NOT STALLING OUT

For years, investors have worried that self-driving cars would make auto insurance obsolete. After all, if the car drives itself, who's to blame in an accident? And if there's no blame, why buy insurance?

But analysts at Bank of America say the industry isn't dying, it's evolving. And the biggest beneficiaries could be large insurers like Progressive PGR.N and Allstate ALL.N.

Both stocks have been resilient in 2025. Progressive is up 3.9% year-to-date, while Allstate has gained 7.1%, outpacing broader industry peers.

"Progressive is already the economies of scale leader," BofA writes, pointing to its low expense ratio and fast-growing customer base.

The top five insurers now control 66% of the market, while nearly 200 smaller carriers each hold less than 1% share. "Efficiency leaders will triumph," the note adds.

As cars become more autonomous, liability may shift from drivers to manufacturers. That's actually good news for insurers. "The auto insurance industry tends to lose money on liability protection," analysts note. Offloading that risk to commercial carriers could improve profitability.

Meanwhile, accidents haven't disappeared, and when they do happen, they're more expensive. "Severity has surged," BofA says, due to tech-heavy vehicles and longer repair times.

Even Tesla's TSLA.O insurance offering isn't seen as a major threat. "We do not believe automobile manufacturers have a desire to be in the low-margin, highly regulated and high capital requirement business of providing auto insurance."

In April, insurer Progressive reported a 10% jump in first-quarter profit, helped by resilient demand for its auto insurance policies and a 20% surge in new personal auto applications.

So, while the road ahead may be filled with smarter cars and shifting responsibilities, auto insurance isn't disappearing, it's adapting.

(Rashika Singh)

*****

EARLIER ON LIVE MARKETS:

U.S. STOCK FUTURES MODESTLY GREEN AHEAD OF POWELL'S JACKSON HOLE PRESENTATION CLICK HERE

IF THE ECB'S DONE WITH CUTS, WHAT HAPPENS TO RATE MARKETS? CLICK HERE

CHEAP AND CLEAR: EUROPEAN PHARMA DRAWS FRESH INTEREST FROM MAJOR BROKERAGES CLICK HERE

DAX: WHERE NEXT AFTER 22% YEAR-TO-DATE RALLY? CLICK HERE

TREADING WATER BEFORE POWELL CLICK HERE

EUROPE BEFORE THE BELL: CAUTIOUS START BEFORE POWELL CLICK HERE

ONE LAST SUMMER HURRAH? CLICK HERE