Commercial fully automatic cars are becoming a reality, with over 250 companies developing such technology. Along with the fact that automated cars are rapidly advancing, laws and regulations beginning to permit their use, forecast a driverless revolution. This begs the question, how will this affect insurance providers?
A reduction in accidents
There are an estimated 1,850 deaths and over 115,000 other injuries related to motor accidents in the UK alone. An estimated 94% to 96% of all accidents are due to human error. Automated vehicles would remove human error from the equation having a drastic effect on road safety. In the last four years, Tesla has had 11 accidents in 3 billion miles worth of driving on autopilot.
This risk reduction could cause third-party damage insurance to disappear. It is estimated that premiums may be reduced by 75%. However, this may be offset by an increase in the cost of the vehicle itself. If an accident were to occur, not only will the components themselves have to be replaced, but the hardware and software would have to be inspected to determine the cause of the crash - potentially compensate for the reduction in ‘traditional’ risk.
Cyber Risk
Many new and developing technologies suffer from the risk of cyberattacks, and self-driving cars are no different. Due to autonomous vehicles' reliance on advanced software to operate correctly, a simple glitch or error could render an entire fleet inoperable or unsafe. Furthermore, such software may need to utilize GPS and other systems along with an internet connection. If this were the case, the vehicle could be prone to cyber-attacks. These could range from signal disruption to complete control. Unless these vehicles have the appropriate defense, they could become very dangerous, very quickly.
Elimination of fraudulent claims
Automated vehicles will need to log and process lots of data. All this data could be stored and sent to their insurance provider in the case of a crash. This would help assess what went wrong and help determine the cause of the accident. This would prevent people from exaggerating and lying about a crash and reducing the number of fraudulent claims and 'crash-and-cash' scams.
The reality of driverless cars
This technology is still developing and these predictions may be proven false. However, there is a lot of the technology in driverless cars is already operable in many cars on the roads today and therefore is only going to increase with time. With the proper oversight and safety, these cars have the potential to all but eliminate car-related accidents. A full shift to autonomous vehicles will take some time, so there won't be any significant effects on insurers for a while. However, sooner rather than later, driverless cars will become the norm forcing a radical change in car insurance as a whole.
