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Autonomous cars on future roads
could end the need for insurance |
In a 2015 interview, Elon Musk pointed out that recent advances in auto technology could lead to human-operated vehicles
becoming illegal
someday.
While this may seem ludicrous to some, it could play out
sooner than you think.
By 2025 — just a few short years away — the auto
industry’s autonomous segment is projected to reach a worth of $26 billion, according to insights from Bain & Company. Some estimates even project as many as 10 million self-driving cars will be on the road by 2020.
Musk’s prediction that human-controlled vehicles could be outlawed
comes from not only an increase in autonomous options, but also for one
simple reason: safety. It’s hard to imagine tech operation being safer
than human operation, but vehicle safety statistics point to driver
error as one of the top causes of auto accidents. In fact, more than
3,000 people were killed and 431,000 injured from
distracted driving
in 2014 alone, with contributing factors including cell phone usage,
fatigue, aggressive driving, and running red lights. Although it’s far
too early for statistical comparison, it’s fair to say that autonomous
vehicles will face far fewer variables and will have greater
predictability in certain driving situations.
Without driver error, will we need insurance at all?
In theory, removing human error from the roads means fewer accidents —
which would also remove the need for private insurance that covers
damage caused by drivers. In tandem, these two changes would lower
accident liabilities and, theoretically, cause a huge drop in personal
auto insurance premiums.
As it stands, auto insurers offer rates based on individual driving
histories, and can even optimize each policy’s pricing via
driver-approved telematics. As the insurance industry adapts to new
technology saturating the market — turning drivers into mere passengers —
the liability for accidents caused by autonomous vehicles could be
handed off to the manufacturer, software designer, or even the
government through the Department of Transportation. “
At least the
current thinking is that the manufacturers will be ultimately
responsible for a lot of these future accidents when an automated
vehicle is involved,”
said Rick Gorvett of the Casualty Actuarial Society.
But the Insurance Information Institute’s
Michael Barry
doesn’t think these changes will wipe out owner responsibility in
total. Barry pointed out that driver error isn’t the only danger to
vehicles, and owners and insurance companies will still have to factor
in off-road damages that may occur. “Cars can still get flooded,
damaged, or stolen,” he said, “but this technology will have a dramatic
impact on underwriting. A lot of traditional underwriting criteria will
beupended.
Read more: Autonomous cars could drive auto insurance to extinction | VentureBeat
