The autonomous driving car is a rapidly developing technology that has the potential to transform the auto insurance industry in significant ways. While some of these changes may be positive, others may pose challenges for insurers and insured motorists alike.
One of the primary effects of autonomous driving on the auto insurance industry is the shift from traditional liability to product liability (Mitchell and Vogel 24). In the event of an accident involving an autonomous vehicle, the manufacturer or software developer of the technology would likely be held responsible, rather than the vehicle’s owner or operator. This could lead to changes in how premiums are calculated and collected, as insurers seek to transfer risk to the manufacturer. This could be particularly interesting in the case of companies like Waymo, where the cars are operated by the system, but manufactured by traditional automobile manufacturers.
Another impact of autonomous driving is the expected decline in accident rates (El-Geenawi 3). Autonomous vehicles are designed with advanced safety features, such as LiDar and camera systems, that can detect and react to hazards more quickly and accurately than human drivers. This potential reduction in accidents could lead to lower insurance premiums, as insurers would be paying out fewer claims.
However, the shift to autonomous driving also raises new risks and uncertainties that insurers must contend with (Greenwood and Yorston 67). For example, cyber attacks on autonomous vehicles or their software could potentially result in the unknown, and insurers would be forced to deal with the unprecedented may have difficulty in determining liability.
The rise of autonomous driving also raises questions about data ownership and control (Guler 89). Insurers would need to work with software developers to access data from autonomous vehicles in order to accurately assess risk associated with their AI driving model. This could raise issues of confidentiality and data protection.
Autonomous driving will require major transformations in the auto insurance industry which I’m sure are being considered and modeled. While the expected decline in accident rates may lead to lower insurance premiums, electric vehicles also often contain premium components such as sensor clusters, and LED screens, that increase repair costs significantly over traditional ICE vehicles.
The insurance industry will need to develop new strategies and partnerships to navigate these complexities, because ALL of this is-on-the way, if not here by the time you’re reading this.
Bryndan D. Moore
#TheBlackFuturist
Cited:
El-Geenawi, Sarah. “Autonomous Vehicles and Insurance” Journal of Insurance Regulation, vol. 32, no. 3, 2022, pp. 3-15.
Guler, Ilkan. “The Impact of Autonomous Vehicles on Insurance” Journal of Transportation Engineering, vol. 147, no. 6, 2021, pp. 89-98.
Greenwood, Jeremy, and Nigel Yorston. “The Risks and Rewards of Autonomous Vehicles” Journal of Risk and Insurance, vol. 90, no. 2, 2023, pp. 67-86.
Mitchell, Lissa, and Brian Vogel. “Liability in the Age of Autonomous Vehicles” Journal of Tort Law, vol. 15, no. 1, 2022, pp. 24-38.
