The US government is getting behind driverless cars, and in a fairly big way.  Representatives from Google, Ford and Delphi joined Transportation Secretary Anthony Foxx at the Detroit Auto Show in mid-January to announce that the 2017 federal budget will propose $4 billion in expenditures for automated vehicle research and development.  “We are on the cusp of a new era in automotive technology with enormous potential to save lives, reduce greenhouse gas emissions, and transform mobility for the American people,” Secretary Foxx said.

The money will be allocated to pilot programs throughout the country.  As more vehicles participate in more pilot programs, autonomous vehicle makers will have more and more data to use for testing safety and efficacy.  Pilot programs in California, for example, can’t test autonomous vehicles in winter weather conditions, but programs in Michigan and other northern states can.

While the government is fostering the development of autonomous vehicles, it will also be testing the national highway infrastructure to make sure it is safe and receptive for such vehicles.  A $4 billion budget allocation is a fairly big bet on the future of driverless cars.   It is clear that the government sees significant potential benefits – in fuel consumption, highway safety, and economic development – in encouraging this new technology.

This is another indicator for insurers that driverless cars will be a reality.  And, even if they do not appear in large numbers for some time, the steady adaptation of automated safety features such as emergency braking will cause the number of vehicular accidents to decrease, putting pressure on insurers’ premium pricing.   Underwriters of auto and commercial vehicle insurance should be developing both mid-and long-term strategies to confront these changes.

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