Autonomous cars aren’t a new concept at this point. Most major auto manufacturers are now either developing or releasing an autonomous vehicle in 2021, Tesla being the most prominent and highest valued automaker in the game.
While the bugs in the process are being worked out, the debate on the impact this will have on the insurance industry as a whole lives on. Human error is a driver in the insurance space and the major methodologies are based on just that. How will self-driving cars affect the space if human error is eliminated?
Will rates drop if, in theory accidents will decrease?
Autonomous vehicles won’t appear in the immediate future, but they are surely on the way. There are different levels of automation, ranging from 1-5. Most vehicles with an autonomous offering are level 1-2.
When level 5 automation becomes a reality, some human operated vehicles will still share the road as well. The risk to insurance firms won’t necessarily be decreased until they are replaced. The business model will have to change in the transition period.
Insurance will still be required to repair damaged vehicles no matter what. And these repairs will be costly when high-tech components need replacing. There’s no reason to think collisions will never happen in a world of self-driving cars.
Additionally, car crashes may decrease with autonomous vehicles, but other risk factors remain. Will no-fault liability become the norm for firms?
Many firms are still using telematics as a means of predicting policy decisions. Most are transitioning to a predictive-analytics methodology to replace telematics and to offer a better experience to their consumers.
Considering the influx of automation in driving and the pace at which these production vehicles are being developed, will predictive analytics become obsolete altogether? If so, how long do you think it will take for the entire industry to shift?
As we slowly progress toward fully autonomous cars, will car accidents decrease?
The path to autonomous vehicles is gradually taking place across five levels of automation. Most cars today feature levels 1 or 2 automation.
If we’re indeed headed toward a world of level-5 autonomous vehicles, there will be a period in which both human-operated and self-driving cars share the roads. As self-driving cars become commonplace and lead to lower rates, how will insurance companies have to change their business model to survive?
There are plenty of changes to come in the insurance space, and one thing we are certain of is that it will be driven by technology innovation.