Are Driverless Cars An Auto Insurance Train Wreck?
Auto Insurers May Welcome Autonomous Cars as Accident Rates Fall
Autonomous cars won’t eliminate auto-insurance premiums, even if they prove safer than human drivers, since accidents aren’t the only risk vehicles face. Auto fatalities are down 23% from 2006 to 2013, even as premiums climbed 9.8% to $186 billion and underwriting margins fell to negative 1.1% from 6.1%. Like other vehicles, autonomous cars would face perils such as storms and misuse, while complex liability coverage and the use of older cars may keep insurers active for years.
Here’s what the new technology could effect:
Automated Vehicle Assistance Technology May Cut Loss Frequency
Automated driver assistance systems (ADAS), such as blind spot detection, adaptive headlights and forward collision alerts, may lead to fewer and less severe crashes, according to a study by PwC. Auto insurers generally base premiums on the frequency and severity of loss data reflecting a driver’s behavior and profile. Any reduction in these factors would need to be considered in new policies. The impact of autonomous technology on insurers will start to be significant in the medium and long-term.
Advanced Car Technology May Spur 10% Motor Claims Drop by 2025
The transition to automated driver assistance systems, may cause a 10% decline in claims by 2025, mainly from reduced bodily injuries and property damage, according to PricewaterhouseCoopers. This is because a shift to systems such as adaptive cruise control and automatic emergency braking should lead to fewer collisions, with the adoption of autonomous technology. A significant reduction in collision rates may pressure premium pricing and could push insurers to rethink offers.