An estimated 5.5 million automobile accidents occur every year. Roughly 9.5 million vehicles are involved and 33,808 individuals are killed. The damages endured from these accidents cost individuals and insurance companies an average of $450 billion a year. What’s more is that 90% of these accidents are caused by preventable human errors.
For years, automobile manufacturers, driving professionals, safety organizations, and insurance companies have worked to significantly reduce the number of automobile accidents that take place every year by running viral marketing campaigns, creating driving-safety classes, and enforcing more rigorous driving laws.
One of the most talked-about proposals thus far is the creation of autonomous, self-driving vehicles. Sure, these automobiles may sound like something far off in the future, along with cyborgs, flying pigs, and gesture-controlled computers, but the Google driverless car is a very real project that could hit the marketplace as early as 2020, according to The Economist.
Using innovative cameras, roof sensors, wheel sensors, radars, and Google Street View, these state-of-the-art vehicles not only reduce car accidents, but they also cut down on commute times, fuel consumption, lost productivity, and more.
In addition to reducing vehicle accidents and preventable deaths, driverless cars can also allow for insurance companies to reduce their premiums, increase their profits, and allow consumers to save thousands each year. It’s a win-win scenario for both drivers and insurers.
What Does This All Mean?
It’s easy to shrug off driverless cars when they aren’t even on the road yet, but whether they’re ready or not, insurance companies are going to have to start preparing for the wave of driverless cars. Even with a 20% adoption rate in the marketplace, driver-assist technology will result in a significant enough reduction in vehicle accidents to noticeably affect insurance premiums.
There are some that fear adopting driverless cars in the marketplace will completely eliminate the need for insurance, but as Forbes wisely points out, the 10% of accidents that will occur will still require some sort of insurance coverage.
So if human error accidents are completely avoidable, then whom will the insurance companies work with? According to Time magazine, insurance companies will likely have to transition their claims from driver liabilities to manufacturer liabilities, since drivers won’t be in control of a car’s movement anymore. In other words, the builders of the cars will be the ones who need automobile coverage.
Looking to the future, drivers, vehicle manufacturers, and insurance companies will all need to prepare themselves for what awaits us over the horizon. If insurance companies refuse to adopt to this new wave of automobile technology, automakers, new insurance start-ups, and even Google could enter the insurance market with new products and business models.
With autonomous cars no longer being a thing of dreams but an actual reality, there will be some changes and adjustments that need to take place. How will insurance companies live up to the challenge? Only time will tell.