Like ’em or not…ready or not…want ’em or not…self driving vehicles are coming…and autonomous safety features for normal cars are already here. But how will it affect your car insurance premium…and car insurance companies in general? In theory, self driving technology should shift the risk of car accidents from the driver…to the vehicle itself. Do the insurance companies already have it all figured out…or are they secretly crapping in their pants?
As it stands now, driver error is responsible for over 90% of vehicle accidents. So if the risk and responsibility for accidents shift away from people…the logical result would be lower insurance costs for consumers….and with premiums currently at roughly $200 billion a year…a huge segment of an industry once deemed “too big to fail” could finally experience major Karma.
But risk management isn’t as simple and linear as we might like it to be…and self driving cars with autonomous safety features raise many questions to be answered before it all shakes out.
For example, driverless vehicles might reduce accident risk…but they would still be sharing roads and highways with human drivers behind the wheel. How would insurance for both types of vehicles be written, and what would it cost?
“We don’t want to see an environment created where you have vehicles that might not be nothing more than glorified golf carts autonomously operating among big-rig tractor trailers.” Jim Whittle – American Insurance Assn.
And as much as we’d like rate reductions…they would be completely opposite of current rising rate trends resulting from:
- A rise in the number of crashes… reflecting more miles being driven
- Higher car sales
- An increase in texting and other driver distractions
In California…annual spending for car insurance nationwide it rose to $782.63 from $756.16 in 2013 (most recent available data). Nationally…it went up 7%…from $786.65 in 2009 to $841.23 in 2013. And unfortunately, vehicle crashes rose 10% to 6.06 million in 2014 from 5.51 million in 2009…says the to the National Highway Traffic Safety Administration.
Insurance bills aren’t coming down yet, but “over time do we think that is going to happen? Yes,” says Joe Schneider of KPMG. The number of accidents could plunge 80% from current levels over the next 25 years…another KPMG principal estimated.
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