Automakers aren’t the only ones concerned about self-driving cars. Insurance companies have taken notice, too — and they’re warning investors that autonomous vehicles could put some big, ugly dents in their bottom lines.
That’s because self-driving vehicles will cause fewer accidents than those with human drivers. Fewer accidents means less risk, and in the world of insurance, less risk means lower rates. That, in turn, means slimmer profit margins for insurance companies.
Naysayers have countered that autonomous vehicles will be prohibitively expensive at first, which will slow consumer demand. That’s probably true, but remember: insurance is a major cost of vehicle ownership. As a recent surevey demonstrated, Insurance companies begin offering significantly lower rates to owners of autonomous vehicles, that could be a game-changer. Depending on the discount, some owners could do the math and discover that they’ll pay far less over the life of their vehicle if they shell out more upfront for an autonomous ride.
And that’s not the only problem that self-driving cars pose to the insurance industry’s status quo:
♦ As autonomous vehicles begin gaining traction, demand for pricier insurance plans — the ones with low deductibles and high coverage — could shrink, as the odds of needing so much coverage diminish.
♦ Simultaneously, owners of non-autonomous cars could also see a rate drop. Even though their vehicles will still rely on human drivers, they’ll be operating on roads full of self-driving cars, reducing their own risk of winding up in accident.
♦ Even before we reach an era full of autonomous vehicles, we will have entered an age of geotrackers — that is, devices that calculate how far and how often we travel. Such devices are already being used by insurers like Progressive to set rates, and because much of their technology overlaps with that found in autonomous systems, the two are evolving hand-in-hand.Geotracking has the potential to magnify the expected drop in insurance rates, particularly among people with short commutes.
To see the original article go to The Car Connection.
