Driverless cars could help obliterate $200 billion in personal and commercial insurance premiums.
According to some top insurance companies, it would be 20 years before Google’s cars cleared all the potholes, resistance, and necessary legislation and actually hit the road.
Insurance companies believe that if 80% of accidents are eliminated, they will save big on the time and expense on the claims which will be a big boon to them.
Being a competitive market, these savings associated with reduced costs of investigating claims/ paperwork would quickly translate across the industry, in the form of lower premiums.
Even with a a 20% adoption rate of incremental driver-assist technology might result in significant enough reductions in accidents to trigger material reductions in premiums. In other words, insurers will feel the effects of driverless technology long before fully autonomous cars become ubiquitous.
Car manufacturers already have assisted parking, and all sorts of sensors to help avoid accidents. Even if Google’s technology isn’t implemented quickly enough to be the silver bullet to the car insurance as the mp3 was to the CD, the trend towards a fully computerized car will undoubtedly quicken.
According to some top insurance companies, it would be 20 years before Google’s cars cleared all the potholes, resistance, and necessary legislation and actually hit the road.
Insurance companies believe that if 80% of accidents are eliminated, they will save big on the time and expense on the claims which will be a big boon to them.
Being a competitive market, these savings associated with reduced costs of investigating claims/ paperwork would quickly translate across the industry, in the form of lower premiums.
Even with a a 20% adoption rate of incremental driver-assist technology might result in significant enough reductions in accidents to trigger material reductions in premiums. In other words, insurers will feel the effects of driverless technology long before fully autonomous cars become ubiquitous.
Car manufacturers already have assisted parking, and all sorts of sensors to help avoid accidents. Even if Google’s technology isn’t implemented quickly enough to be the silver bullet to the car insurance as the mp3 was to the CD, the trend towards a fully computerized car will undoubtedly quicken.
There is no doubt that far more friction remains for Google to put the driverless car on the road than existed for the mp3 to replace the CD, or for digital photography to replace film.
Obstacles include regulatory hurdles, the cost of insuring cars switching from drivers to manufacturers -- something car makers would be loath to do, in large part to due to the uncertainty and chaos of no previous existing model for it, to getting the average person to accept a computer driving them around, and those fuming that they paid 30k for a new car just a couple years earlier, and damned if their going to lose out on their investment.
However, the trend to me seems clear. The pace of innovation and disruption is only increasing. Film went the way of the dodo when the digital camera arrived. Travel agents, newspapers, and high-commission stock trades were done in by the Internet. PC’s are rapidly being replaced by tablets and mobile phones. And few people in those industries were prepared for the massive shifts.
It’s my belief that car insurance in its current form will disappear, and at minimum, the vastly cheaper rates of insuring a fleet of driverless taxis will take away a substantial amount of the float insurance companies use to generate their profits.
If nothing else, I’ll certainly miss those funny GEICO commercials.
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