Will Self-Driving Cars Kill The Auto Insurance Industry?

A recent article in Forbes Magazine speculated that the advent of self-driving cars would cause the auto insurance industry either to change its structure or render it obsolete. According to researchers at McKinsey & Company, the widespread use of autonomous vehicles would eliminate up to 90 percent of all fatal traffic accidents by 2050. This steep reduction in collisions, the article states, would force the auto insurance industry to “be transformed or else wither and die” as accidents due to human error would be all but eliminated.

Auto Insurance Industry and Fatal Accidents

Reports from the auto insurance industry showed that more than 29,000 Americans died from auto accidents in 2013. The number of fatalities from auto accidents worldwide that same year was estimated at 1.2 million. If the estimates hold true, self-driving cars would reduce the number of fatal accidents to just under 3,000 Americans per year and about 120,000 worldwide. This sharp drop in the number of fatalities would have an enormous impact on nearly every facet of the economy, including the auto insurance industry.

Auto Insurance Industry May Change Its Structure

The current model for the auto insurance industry seeks to reward drivers with clean driving records, while raising the premiums for those involved in accidents. If most drivers use autonomous vehicles, the punishment-and-reward system for drivers essentially becomes a moot point. Also, many of the leaders in autonomous vehicle technology, including Volvo and Mercedes-Benz, have announced that they would take on the liability issues that had previously fallen to individual vehicle owners. If these changes go into effect when self-driving cars hit the roads, auto insurance industry leaders will be forced to re-examine their market model.

Auto Insurance Industry Faces New Technology

Tesla, the leading manufacturer of luxury all-electric vehicles, announced its own “auto-pilot” system for its Model S vehicles. The system is not yet fully autonomously, mainly due to concerns on how such models would be handled by the current auto insurance industry. Along with the innovations from automakers, many of the changes affecting the auto insurance industry will come outside the auto industry itself. Technology giants Google and Apple are developing many of the software packages that will manage the systems for autonomous vehicles.

How Will Technology Change the Auto Insurance Industry?

Just as the development of online shopping changed how the auto insurance industry handled its customer-facing interactions, the advent of driverless cars will force it to adjust its business model. As vehicle owners move from the role of active drivers to passive passengers in their own vehicles, the burden of liability will shift off their shoulders – and off their checkbooks. The auto insurance industry must soon determine whether that burden will shift to the automakers, software developers, or other related parties.

Source: Forbes

Get Answers For Your Auto Insurance Lawsuit Questions

To find out how we can answer your questions about auto insurance lawsuits, contact one of our attorneys today. Our intake team will take down the details of your case and quickly connect you to an attorney who understands how to get the most from your auto insurance lawsuit. You can also fill out the “Free Case Evaluation” form at the top of this page.

NOTE: This blog post is a news story and is not an endorsement of Arguello Law Firm by any party mentioned herein.