Self-piloted cars could cut annual premiums by £265 on average within five years because the vehicles are expected to "eliminate bad driving", which is the cause of 90pc of road accidents.
According to industry experts, the new technology is developing at such a pace that road accidents caused by human error will be almost eliminated in the next half-decade. Nearly all new cars will park and drive on the motorway automatically, and communicate with vehicles to avoid collisions.
John Leech, head of auto at consultancy KPMG, said: "Insurance premiums could halve once vehicles which communicate with each other and an 'autopilot mode' when driving on the motorway are developed – this is likely to happen by approximately 2020."
Connected and Autonomous Vehicles – The UK Economic Opportunity (KPMG)
• The overall economic and social benefit of connected and autonomous vehicles could be in the region of £51 billion per year by 2030.
• Connected and autonomous vehicles could create an additional 320,000 jobs in the UK by 2030, 25,000 of which would be in automotive manufacturing.
• By 2030, connected and autonomous vehicles could save over 2,500 lives and prevent more than 25,000 serious accidents in the UK.
KPMG has a report- "Self Driving Cars are we Ready?
Historically costs have been kept high by "avoidable accidents", which account for the majority of insurance payouts, said Matthew Avery, safety researcher at Thatcham, a vehicle rating firm.
Whiplash claims and car parking disputes, for example, cost more than £3 billion a year and account for 94pc of all insurance claims.
Manufacturers claim hi-tech driverless cars can eliminate these types of accidents. The vehicles are already being tested on the roads in America.
According to predictions by the British Insurance Brokers' Association (Biba), nine in 10 cars owned in Britain will be fitted with some sort of "smart" technology within five years, with accident numbers falling sharply as a result.
Mr Avery said: "Because of these technologies a lot of commentators are predicting an 80 per cent reduction in killed and seriously injured on our roads within 15 to 20 years which is great news."
By 2030, newer automatic vehicles should prevent 90pc of cases of people being killed or seriously injured on the road, according to separate predictions made by KPMG.