Driverless Cars: What Happens to Car Insurance Companies?

Tahir Ismail May 8, 2015 0

The UK is exploring the potential to introduce driverless cars sometime in 2015, with the U.S. following close behind. The onset of these futurist marvels has been the focus of discussion for many tech enthusiasts as well as automobile aficionados. Authorities claiming that economies will face monumental changes in the next few years due to driverless vehicles, has garnered the attention of insurance companies worldwide. What the future will bring to insurance companies currently relying on human-operated vehicles for profit, will be seen sooner rather than later.

Car Insurance

The Makers and Shakers

Driverless cars have been in the works since the mid 1960s, with German car companies pioneering the engineering and mechanics behind the projects. Soon after, Volkswagen, Tesla, Audi and other makers made way, with Google’s media attention and elegant Google Chauffeur software having the spotlight.

The Lowdown

As it stands today, all car brands seem to be working closely on producing driverless cars of their own, creating some steep competition within the automotive industry. What distinguishes one make from the other might be defined be a simple safety factor. In fact, car makers of autonomous vehicles are prioritizing the reliability of safety apps and accuracy of software systems to avoid collisions and false route trajectories. As futuristic as it might seem, automobile companies are aiming to eliminate car accidents altogether.

The question facing insurers is, if car accidents do finally cease, shall the same happen to car insurance as a result? The arrival of driverless cars is said to have the most significant impact on this market, due to the reliance of car insurers on the notion that vehicles are operated by humans, and humans are thus accident-prone. However, like all devices that run on software and use intricate hardware, malfunctions are bound to occur. And thus, driverless cars will break, dealing with their own insurance-related issues.

Needless to say, the market is quickly evolving and, as such, car insurance companies should consider evolving as well. This might entail changes in market prices or maintaining affordable and premium insurance rates, encouraging those who might hesitate to invest in insurance down the line. According to CoolBuzz.org, “…with the appearance of autonomous cars, individual no claims bonus could seize to exist as it may become irrelevant with the passing of time. The business of insurance companies should already start preparing for the impact of this great change.”

The discussion surrounding the future of driverless cars has been a heated topic for gurus of vehicles and automotive fanatics. From when these will be available to the general public to the insurance implications of having them replace human operators, debates are veering in all directions. Ultimately, driverless cars remain on the cusp of technological advancements in the world, despite its debatable effects on the insurance industry. With artificial intelligence taking precedence over human labor, it’s suffice to say that driverless cars are taking us one step closer in that direction. Whether this innovative technology will have a positive or negative impact on the insurance industry by then, has yet to be seen.

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