Driverless technology is inevitable. The good news is that these robotic cars will save lots of lives the reason why driverless car technology is gaining steam. It is predicted that in the United States alone, driverless cars could save about 33,000 lives annually. There will be 90% reduction in traffic fatalities and about 10 million lives worldwide will be saved in every decade!
Self-driving cars and liability
How far is the owner of the car liable when he/she is not in control of the vehicle? When a full autonomous car is sold, it already includes its insurance. In case of a self-driving car accident, the fault will be attributed to the car’s software and not on human occupant so the vendor of the car needs the insurance more than the car owner. A law is needed to mandate some sort of amount of legal immunity for the makers of this new car technologies, or formulate another option for a legal system of compensation when things go wrong.
Insurance premiums and car owners
Autonomous vehicles could bring about a massive reduction in insurance premiums for car owners. KPMG, a consulting firm, released a report predicting enormous savings for vehicle owners when autonomous cars will populate American roads. Aon Benfield, the world's leading reinsurance intermediary, predicted that the continuous influx of the self-driving vehicles over the next few decades could cause massive vehicle premium reduction.
It is expected that the pure industry’s premiums will drop 20% by 2035, even if the technology is adopted at a moderate pace. Even at the same moderate pace, those premiums could dive more than 40% if robotic vehicles are fully adopted as expected, by 2050.
Insurance Companies and self-driving vehicles
In a future without drivers, insurers must find will new methods to determine risk. Today, actuaries know how many total miles are driven and use reports from demography, data information and others to calculate the price. These are used to determine pricing. With the removal of the human factor and the focus is shifted to other variables as hacking, or geographic variations in the quality of satellite imagery coverage, it is difficult to determine the price. In a driverless future, insurers will have to devise a new way to calculate risk. The plunging premiums are certainly bad news for motor insurers, but companies are spinning it as a new opportunity.
Impact of robotic cars to insurance
Rapid progression of changes in the self-driving vehicle technology is coming from manufacturers. Meanwhile, the car insurance industry is not standing still as it is disposing itself for extensive ranging transformations from all aspects involved in the business model. If self-driving cars are really secured and safe according to manufacturer’s claim then established insurance policies will become outdated.
In the end, who has the liability when a robotic car crashes? Is it blamed on the vehicle, the driver, or the vehicle’s manufacturer? Car manufacturers are studying the possibility including an insurance policy as part of every vehicle sale. This new provision is no longer in line with the traditional procedure where selling cars and providing insurance are separated. This is introducing new competition into the insurance market. However, you do not see the death of the vehicle insurance industry: it simply is finding new adaptations to the new challenges inherent to robotic cars.