For the most part, driverless vehicles represent a step in the right direction, both in terms of technology and reducing road accidents, which ultimately translates to saving lives. This also renders car insurance obsolete, which has some in the industry worrying.
Driverless Cars Represent the Next Technological Wonder
Analysts predict a prosperous future for driverless cars. The car industry should be taking notice and here’s why:
- Google is experimenting with driverless cars, and some of its prototype models have already driven over 300,000 miles on actual roads.
- Volvo and Nissan have already announced plans to release their own lineup of driverless cars by 2020.
- Google predicts that once driverless cars become the norm, collisions could be reduced by up to 90%.
On the surface, driverless cars seem to make sence, and it is not a stretch to say that computers are better drivers than humans. This means that at some point in the future, families no longer have to grieve over losing loved ones in an accident that was senseless and preventable, or that an innocent motorist has to spend the rest of his life in a wheelchair because he was t-boned by a driver who was texting. There is no debate that driverless cars are a technology that will save lives.
Why the Car Insurance Industry Needs to Brace for Impact
Needless to say, the advent of driverless cars will have some unintended consequences. The drastic reduction in collisions means that the car insurance industry may eventually be driven to bankruptcy. It won’t happen instantly; in fact, insurance companies may initially see a profit rise due to reduced payouts from claims. However, vehicle owners will eventually stop renewing car insurance, resulting in lower income for the insurance companies.
Even those who continue their policy would end up paying a much lower premium than they currently pay. Premiums should reduce dramatically if collisions reduce. Google anticipates a collision reduction of up to 90%. Surely a lower premium is better for the client, though it translates to a profit loss for the company.
Other Industries will also Take a Hit
It’s not just the car insurance industry that will feel the pinch. Think about all the other industries that will be affected. Lesser collisions also mean lesser needs for the following:
- Tow truck drivers
- Medical personnel
- Police officers
- Smash repairers
There is no Need for Worry at The Moment
While driverless cars could possibly mean trouble for the car insurance industry, any fear or apprehension at this point would really be unfounded. Due to factors like cost and regulations, it would will be decades before driverless cars become commonplace, if at all. This means there is plenty of time for car insurance companies to figure out how to adapt. Collisions, after all, will not completely be eliminated, and when they do occur, they will likely be far more costly due to the cars being fitted with expensive technology like cameras and sensors. This means that there will always be a need for insurance in some form or another.
Driverless cars are still just an experiment. If the car and other industries want to remain afloat, then they will find a way to remain relevant and modify their services in a way that accommodates driverless cars.