Chamath Palihapitiya Warns Of 'Massive Value Destruction' For Insurers In Autonomous Era — Only 'Rich Enthusiasts' Will Continue To Drive

Author: Vishaal Sanjay | October 27, 2025 04:26am

Billionaire investor Chamath Palihapitiya is predicting a significant shift in the auto insurance industry, driven by the growing penetration of Alphabet Inc.’s (NASDAQ:GOOG) Waymo and Tesla Inc.’s (NASDAQ:TSLA) Cybercab in the U.S. domestic mobility market.

‘Massive Value Destruction’ For Insurers

On Sunday, in a post on X, Palihapitiya said, “car insurance becomes a highly profitable but massively sub-scale business” in a world where robotaxis are the norm.

This refers to plummeting demand for personal car insurance, as human driving becomes optional, alongside lower risks and liabilities for insurers, since autonomous vehicles will make the roads safer.

See Also: Tesla Worth $3 Trillion? Dan Ives Says Autonomous, Robotics Roadmaps Are Keys

According to Palihapitiya, the economics of driving will be fundamentally transformed. Insurance that allows people to personally operate a vehicle “will become a very expensive luxury good and be priced as such.” As such, “most people won't bother,” he said, noting that the market will only cater to “rich enthusiasts” who can afford it.

This, Palihapitiya said, will lead to “massive value destruction of incumbent insurers over time,” as their business models currently center around pricing risk based on human error, which will become obsolete with machine-driven vehicles.

In a world of autonomous cars like Waymo and Cybercab:

Car insurance becomes a highly profitable but massively sub scale business.

Insurance so "you" can drive on the roads vs a robot will become a very expensive luxury good and be priced as such.

Most people won't bother.…

— Chamath Palihapitiya (@chamath) October 26, 2025

Billions In Revenue And Market Cap At Risk

If Palihapitiya’s predictions unfold just as he said, it stands to have major ramifications for the $470 billion U.S. auto insurance industry.

Stocks	Auto Premiums Written (2024)	Market Capitalization
Progressive Corp. (NYSE:PGR)	$60.0 Billion	$128.47 Billion
Berkshire Hathaway Inc. (GEICO) (NYSE:BRK) (NYSE:BRK)	$41.7 Billion	$1.06 Trillion
AllState Corp. (NYSE:ALL)	$36.6 Billion	$51.35 Billion
USAA Insurance Group	$22.1 Billion	$29.15 Billion
Travelers Companies Inc. (NYSE:TRV)	$7.2 Billion	$60.2 Billion

Read More:

• Tesla’s $1 Trillion Illusion: Elon Musk’s Pay Package And The Robotaxi Myth

Photo courtesy: Shutterstock

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