Few technological innovations have proven themselves to be as intriguing and disruptive as autonomous vehicles, yet the world still isn’t entirely prepared for the reality of self-driving cars and trucks. Despite the widespread hubbub being generated by the growing presence of self-driving vehicles on modern roadways, relatively little is being done to prepare society at large for the forthcoming day when most vehicles on the road are operating themselves. The insurance industry has been particularly slow to react to autonomous vehicles, with leaders in the market only just now beginning to take action on self-driving cars.
Here’s how autonomous vehicles will affect the insurance industry, and what some companies are starting to do in order to gain a leg up on the self-driving revolution.
Automakers Are Foraying Into Insurance
Automakers have always been deeply interested in dominating the car insurance market, yet it wasn’t until recently that major companies had serious opportunities worth pursuing when it came to including insurance in the initial sale of the vehicle. Over the past few years, however, we’ve seen a number of convincing reasons that should lead us to believe that automakers will keep foraying into the realm of insurance with gusto for the foreseeable future. What Tesla is doing when it comes to insurance packaging, for instance, demonstrates that automakers with self-driving products will make convincing arguments that the safer nature of their autonomous vehicles demands lower premiums.
Tesla is intending to sell cars with insurance in the future, having already initiated a small program across Asia to gain some experience in the field. The reason the futuristic automaker is convinced that selling insurance is the route to go is an obvious one; Tesla wants more and more of its vehicles to be capable of piloting themselves, as the company argues that autonomous vehicles are safer than traditional human drivers. With improved algorithmic software and autonomous infrastructure to make them even safer, the company is betting, autonomous vehicles will eventually force the auto industry into dominating the insurance sector.
With cars becoming more complex and thus expensive to fix, however, there are counter-arguments positing that insurance premiums will actually rise in the near future because of autonomous vehicles. Insurance companies in Canada have already begun preparing for this autonomous future and auto insurance in Ontario will soon be available particularly for this market. But, in the end, these arguments center on the fact that self-driving cars naturally pivot liability away from individual drivers and towards automakers and insurance companies charged with providing the intelligent vehicles that pilot themselves. As such, there are reasons to believe that while self-driving cars shake up the insurance industry they’ll also lead to higher premiums by forcing insurers to change their business model in the face of rising costs.
What Are We Insuring, Anyway?
Perhaps the most notable way that autonomous vehicles will affect the insurance industry is by provoking a number of philosophical questions whose answers have deep implications for the future of the industry. What and who are insurers covering in this day and age, anyway? Existing insurance business models will have to contend with the fact that insurers in the future may be covering the automobile’s manufacturer, driver, or software producers alike. The immense complexities behind autonomous vehicles won’t go away anytime soon, and with so many shareholders at stake, it’s going to be a nightmare for insurance professionals to figure out who’s liable and worthy of coverage.
Industry professionals will also have to grapple with forthcoming regulations, as the nascent autonomous vehicle sector is going to get additional attention from politicians and lawmakers as it grows and becomes more prominent in society. While self-driving cars are a humorous gimmick in many parts of the world today, soon they’ll be everywhere and thus require extensive laws. A background on self-driving cars and how laws and regulations are shaping their development will be needed by anyone hoping to understand the insurance or auto industries anytime soon.
Despite the tumultuous times ahead, there are reasons to be happy about the rise of autonomous vehicles. Self-driving cars and trucks are proving themselves to be more reliable drivers than humans, for instance, demonstrating that fewer lives will be lost to accidents in the future. In the meantime, however, insurance professionals will continue to find it necessary to stay up to date on developments in the field of autonomous vehicles if they don’t want to find themselves obsolete.