A new report predicts that while insurance companies may reap the benefits of autonomous technology initially, down the road insurers will suffer when forced to lower premiums and revamp policy structures.
Tesla, Nissan, Ford, Daimler, and Google are all in the process of testing and developing fully autonomous vehicles. Some reports say we could see them as soon as the next few years. Analyst Jasper Cooper forecasts that by 2045, most vehicles on the road may have the technology in place.
As the technology becomes more mainstream, it is assumed that there will be less accidents. If insurance companies can keep rates locked in for a period of time, customers will be paying standard premiums despite less probability of the need for them. Cooper said that insurers may be able to combat lowering premiums for up to a decade, until accident frequency declines are fully proven, and regulations are mandated.
At some point, premiums will have to drop to mirror the drop in accidents. Cooper explained:
“Widespread adoption of self-driving cars is still decades off, but it raises questions of what an auto insurer’s role will be in a world with far fewer accidents. Regulators, lawmakers and courts will have to determine how liabilities are shared among insurers, automobile manufacturers and technology companies.”
Cooper said that there will probably always be a “limited demand” for vehicle insurance due to other factors. Self-driving cars will never be free of mechanical failures, which could easily lead to accidents. Some drivers, if given the option, will continue to drive or assist manually. Differentiating between the computer driving or the human driving, along with specifically how much or how little assistance in a given situation may prove difficult.
Fortunately for auto insurance companies, the movement toward fully autonomous technology will be gradual. Companies may have decades to adapt coverage and policies to fit the new mold.
Source (Automotive News)