Legal liability will shift to the manufacturers, therefore individuals will not require insurance. Insurance policies will be purchased by the manufacturers and will cover the entire fleet under one policy.
> coverages should in theory get less expensive if claims drop
This is certainly the largest factor, as insured losses are expected to drop by 90%. A secondary factor will be that car manufacturers will be able to negotiate wholesale “group policies” on large fleets and get a better rate. Or they could self-insure and cut out the insurance industry completely.
> but profit margin on policies doesn’t necessarily change
I have already noted the profit margin pressure arising due to wholesale fleet insurance / self-insurance. But the more important point is that profit margin is not the only relevant measure for an industry. The total amount of revenue is equally important. If profit margins stay the same but revenues decrease, then there is a reduction in net income. Note that prices are expected to fall 90%, which directly impacts revenue.