Could self-driving cars topple the auto insurance industry? Not likely, officials say
With driverless cars slowly but surely becoming a reality on roads everywhere, the question on everyone’s minds remains: Who is at fault should a driverless car figure into an accident?
No other question has given the auto insurance industry quite the headache. While some believe that the advent of self-driving cars would usher the end of auto insurance, there may yet be a role for car coverage with a little adjustment.
According to a feature on the Los Angeles Times, the introduction of driverless cars is expected to lead to the sharp drop of car-related accidents, as over 90% of such accidents are attributed to driver error. Theoretically, this fact should lower insurance bills for consumers, but conversely it could shrink the personal auto insurance market, the article posits.
A number of insurance giants have voiced their concerns over self-driving technology, citing that it would upset the industry.
In a speech last year, Allstate Corp. chariman Thomas Wilson notably said that the move to driverless cars could have “the most detrimental impact on auto insurance.”
Investor Warren Buffett—also chairman, president and CEO of Berkshire Hathaway, which owns GEICO—also said last year in a forum that “we would not be throwing a party at our insurance business” once driverless cars are introduced.
Despite such skepticism, some insurers and industry experts have stepped forward to meet the challenge the “robot cars” pose.
British company Adrian Flux Insurance Services recently launched what it touts as the first “driverless car policy”—it covers existing cars using autonomous features such as self-parking and autopilot systems. It would also cover drivers for situations out of their control, such as satellite failures or cyber-attacks from hackers.
“We wanted to help provide confidence and clarity around the ongoing debate of ‘who is liable?’ ” remarked Adrian Flux General Manager Gerry Bucke in a statement.
On the side, analysts agree that while liability continues to be an issue, consumers will still need insurance for damages outside of driving, such as from falling trees or vandalism.
American Insurance Association Assistant General Counsel & Chief Claims Counsel James Whittle is not too worried, and believes driverless cars will not be too much of a big problem for the industry, for “the simple reason that a lot of people like to drive.”