How do we insure autonomous cars?
Unlike the agile and innovative entrepreneurs they serve, insurance companies have taken much flack for being slow to adapt to technological change. In particular, the recent growth of autonomous vehicles have the industry scrambling to adapt in the face of potential disruption.
Some experts and analysts now predict that emerging technologies will eliminate up to 80% of auto premiums and perhaps make auto insurance obsolete entirely. Others caution it’s too soon to write it off.
Now, to step back a bit, some autonomous capabilities have been around for a while.
For example, cruise control and its more evolved sibling adaptive cruise control first became widespread in the early 2000s. Others include forward collision warning, drowsy driver detection, adaptive headlights, lane departure sensing, blind spot assistance and self-parking systems.
We bring up “autonomous-lite” features because they may be sowing the seeds for greater public acceptance of full autonomous vehicles.
Currently, drivers have to enable cruise control and self-parking. In the future, assuming a conservative development scenario, autonomous features may assume a similar form. They may also become a widely accepted safety and convenience feature like seat belts and air conditioning, respectively.
On the other hand, more aggressive predictions envision autonomous cars calling the shots and taking the human factor out of the picture altogether. There are also a range of intermediate outcomes between these outliers.
As vehicles become increasingly autonomous, we will see “risk shifting” where the various autonomous technologies move risk away from driver error to malfunction or product-liability.
This means liability questions now become the concern of the auto manufacturers who will package adapted insurance coverage with their vehicles. To this end, manufacturers will strike partnerships with insurers.
“Risk slicing” will also become a consideration for drivers and insurers. This is when drivers are able to engage and disengage autonomous driving depending on road conditions, whether they’re tired or intoxicated and so forth. The “slices” refer to the varying risk profiles throughout a given drive. Adapting to this, insurers may adopt a mileage based pricing model for such vehicles.
Shopping for these high tech vehicles in the next few years, you may encounter increased marketing for insurance coming from your automaker and dealership. And don’t be surprised when car ads on T.V. start offering deals on insurance.
Once car markers get into the insurance game, drivers will need to carefully examine their options lists and policy details when purchasing vehicles to make sure the manufacturer is providing appropriate coverage. This is one area brokers can kill two birds with one stop by helping their customers make sense of technological changes and modernize the industry.
What’s your take on autonomous vehicles? What kind of changes do you think we’re in for? Comment below or tweet us @TheShepherdGroup