The future is here: technology companies like Google and Apple, as well as established automobile distributors like Ford, Volvo, and Audi have already developed self-driving cars and are announcing plans to test even more driverless cars in the coming months. Ford’s autonomous vehicles team estimates they have roughly ten cars currently driving right now, with hopes to triple that number by the end of the year. Jim McBride, the technical leader of Ford’s team, predicts that the underlying technology to create affordable, every-day driverless cars will be available to all auto developers within the next five years.
With driverless technologies advancing at such a rapid rate, experts have started to consider how these changes will affect the auto insurance industry. While some people believe that driverless cars will be the death of the insurance business, companies are sure to lose money as premiums drop. A new study from KPMG reports that though some insurance companies will come out on top, many in the $200 billion-per-year industry will struggle to make ends meet and ultimately fail.
KPMG, a leader in the professional service company industry, found eight key elements that will alter and transform the landscape of driverless automobiles. These elements are the same factors that insurance companies will need to acknowledge and adjust to in order to stay afloat.
Integrity of technology
As mentioned above, many of the technologies needed to make self-driving cars a reality already exist. However, as these technologies progress, distributors and inventors will have to converge these new aspects with existing technologies in order to make driverless cars accessible for the masses. For insurance companies, this might mean changing policies to reflect the effectiveness of certain technologies and how they play into the safety and reliability of the vehicle.
Driverless cars don’t need special roads or conditions to operate - the technology allows these cars to drive on existing roadways. However, as the presence and usage of self-driving cars increases, road infrastructures are expected to also get “smarter”, allowing vehicles to communicate with street signs, other cars, road conditions, etc. Again, insurance companies could possibly change their policies and regulations depending on how prevalent these smart-technologies are in particular areas. For example, policyholders in urban areas where smart-infrastructures are common will likely benefit more from driverless cars than those in rural areas without these advancing technologies.
Like Ford, many traditional automobile manufacturers expect to make new vehicle technology more sophisticated and accessible to the public. Insurance companies might guage premiums depending on which company’s high-tech car policyholders drive. Right now Google, Tesla, and Apple are industry leaders, but this could easily change in the coming years.
So far 16 states have passed or introduced bills related to driverless cars, and the National Highway Traffic Safety Administration suggestively backs the idea of making self-driving cars more prevalent on U.S. roads. Insurance policies will have to change depending on issuing state regulations.
Because these vehicles are responsible for making many important driving decisions, lawmaking officials, police officers, and insurance companies alike will have to develop new methods in determining who and what is responsible when an accident occurs. In this sense, insurance companies will benefit because they can develop policy coverage to provide protection for both individual passengers and the driving corporation.
Car sharing, like Uber and Lyft, is already a common technology for many urban drivers. Not only is car sharing convenient for drivers, but it provides many cost-advantages for the user, too, because they don’t bestow the financial responsibility of owning and operating a car. By adding driverless cars to this equation, self-driving car sharing could have considerable ramifications on the auto insurance industry.
Experts have already seen the amount of data that self-driving cars produce, and they expect this number to escalate exponentially as the web of driverless vehicles, smart-infrastructures, and other technological factors grow. Insurance companies can use technologies like driving records (similar to an airplane’s “black box”) and data management tools to adjust policies depending on the car’s integrity, analytics, and security.
Getting consumers hooked on the idea of driverless cars is simple, especially after they understand the benefits like:
The ability to multi-task
More independence, etc.
While consumer education and awareness will be important for the overall adoption of driverless cars, these factors will also play a valuable role in the way insurance companies approach policy regulations and limitations.
While considering the future of cars can be thrilling, you shouldn’t lose sight of the car you currently have. Whether you’re driving a new or used car, having reliable auto insurance now will ensure your physical and financial security in the future so that if and when the time comes, you can comfortably settle into a driverless car and say “so long” to the demands of everyday driving. Visit Insurance Center Associates, San Pedro’s leading car insurance agency, today to get reliable, affordable coverage.