BLOG: By SPAN Systems
Driverless cars are not just on papers anymore. In fact, outcome of the research & technology such as parking assistance systems and collision avoidance systems are already in many cars. However, a full-fledged automatic vehicles post lot of challenges to state laws & insurance policies. By end of year 2020 Google has plans to launch a self-driving car which would have driven almost a million miles without causing a single accident.
Insuring Driverless Cars:
Self-driving car poses greater questions for the auto insurance companies. As premiums will be arrived considering the probability of damage occurring to a vehicle. Some analysts feel that driverless cars will cause premiums profits to decline rapidly due to its driving efficiency & the concept of ‘Usage Based Insurance’ in the auto insurance industry. While some others opine that the expensive devices and software used may increase the premiums and increase demand for comprehensive policies.
How driverless cars could benefit Insurers:
This changing trend could also rise new opportunities to insurance companies. If the accident is caused by software defects of the self-driven car rather than human error, car makers will likely be liable for the damages. This could rise new kinds of insurance products which would protect car makers against the lawsuits.
Large number of usage based insurance products could be marketed.
In United Kingdom, 23% of car insurance claims are result of parking incidents, out of which 71% occur while car reversing. These claims could be eliminated to a very large extent.
How driverless cars could become threats to Insurers:
- Driverless cars may cause disruption of the insurance market as technology innovations could increase the efficiency to a greater extent there by decreasing accidents & consumer demand for insurance products
- Currently, a majority of insurance premiums go towards the damages of third parties. In the long term that is largely going to reduce.
- Insurance companies need to invest a lot on research in order to define new insurance products that would insure driverless cars
- Driverless cars would shift liability to car makers, the software vendor or other third parties & thereby sharing the risk
To conclude, it is too early to decide how driverless vehicles will change regulations and auto insurance policies. No one really knows how the driverless car scenario will ultimately play out, but below elements could be emerge in the market:
- Automated safety features will be reducing the accidents
- Over premiums charged by insurers will decrease to reflect lower levels of risk
- Liability for truly driverless cars is likely to shift from individual owners to automotive manufacturers or to fleet owners offering shared cab-like services
- Driverless cars will be more vulnerable to hacking and other forms of misconduct