Self-Driving Cars Could Affect Auto Insurance Companies
Google's autonomous cars are not an uncommon sight in Walnut Creek and surrounding areas. The potential changes to such a fundamental technology could cause ripple effects throughout the American economy, and some of the groups that could be affected are the companies that insure automobiles and passengers. Nearly 300,000 people work in the U.S. auto insurance industry that produces annual revenue in excess of $200 billion. As self-driving cars are projected to have astronomically lower rates of injury and damage to property, there is a possibility that the profits that power that industry may be substantially reduced. One consultant believes that the market will be reduced more than 60 percent by 2040.
This may have serious unintended consequences. For example, insurance companies often provide realistic data and statistics on consumer risk. Their ability to estimate dangers is directly tied to the profitability of their business, so insurance company statistics have often been taken into account by lawmakers. Without these companies, the ability to make realistic public policy may be adversely affected.
No matter what happens, change is almost certainly coming to the insurance industry. One possibility is that autonomous vehicles may be self-insured. Instead of depending on the driver or owner to maintain insurance coverage, the manufacturer would take care of that.
There have already been several car crashes involving autonomous vehicles, although to date no injuries have been reported. However, technology isn't perfect, and in the future when an occupant of another vehicle is harmed in a collision with a self-driving car, an attorney may have to make a determination as to the party or parties that should bear financial responsibility.
Source: Forbes, "No, Self-Driving Cars Won't Kill the Insurance Industry", Patrick Lin, April 25, 2016