A recent study states that if automated vehicles reduce risk and total accidents, there should be a 'significant reduction in insurance premiums.' But what is the proper premium for this car of the future right now?
According to a Business Week article, “In writing driverless insurance policies, underwriters will likely focus on the make and model of a car instead of a driver’s accident history or how often he drives. There may also be the introduction of ‘black boxes,’ data recorders akin to those found in airplanes that can track car data and decipher what really happened seconds before a crash.”
This echoes a RAND Corporation study, which asserts automated, driverless vehicles have the potential for “significant reduction in insurance premiums.”
From a Canadian perspective, Steve Kee of the Insurance Bureau of Canada sees a lot more research and analysis will be needed before any kind of real assessment can be made.
“Driverless cars may be a ways out on the horizon and while the insurance industry is adapting it will take a lot of research and consideration to insure a driverless car and we are not sure yet what that product would look like,” says Kee. “I don’t think many of us would have predicted even five years ago that we would see pilot projects for driver-less cars.”
In the United States, California has begun issuing self-driving car permits for manufacturers and Georgia has been vying for to be a pilot site for ‘autonomous vehicle design, development and testing.’
Although seemingly ready right now to take the next step in driverless car technology, there are questions that remain.
Specifically the financial and legal implications of driverless car insurance. (continued.)
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“It holds tremendous potential in terms of reducing human error, accidents and fatalities,” California Insurance Commissioner Dave Jones told newswheel.com. “But it also raises a lot of questions about what is the appropriate insurance product.”
According to the International Organization for Road Accident Prevention, the $157 billion auto insurance industry thrives on human error as the cause of 90 per cent of road accidents. Self-driving cars would remove that primary contributor, as removing the human factor also means removing road rage, distracted driving, speeding, and tailgating, to name but a few.
It holds the promise of reduced rates – but what does it hold for the future of insurance?
“We can’t predict the future but we can make some safe bets about the evolution of insurance,” Kee told Insurance Business. “This industry will become increasingly information-based, technologically connected and even more globalized. The risks that confront personal and commercial lines customers will become more complex.”
