In suggesting that insurers’ auto coverage revenues might not suffer quite as big a hit as many experts predict it will when self-driving cars hit the roadways, I posited last time that the kind of technology that emerges could be critical. Certainly, auto insurance revenues will be pinched as self-driving cars lead to significantly fewer accidents and claims. But the reduction in auto insurance revenues might not be as significant as some predict if automakers opt to offer self-driving cars with auto-pilot technology that drivers can disengage, as opposed to fully autonomous vehicles that do not even have steering wheels, brake pedals and accelerators.

How likely is that scenario?

As I noted last time, surveys by the Insurance Information Institute and J.D. Power show that even a significant portion of younger consumers are dubious about the technology, and far more older consumers distrust it.

I don’t imagine that some recent setbacks, including a fatality, by self-driving car developers will materially slow the advent of this technology, but they might influence it.

For example, in June, Tesla Motors acknowledged in a statement that a driver was killed when the auto-pilot technology in one of its self-driving vehicles failed to respond when a tractor-trailer truck crossed in front of the car. The car did not automatically brake, because it did not distinguish the truck’s white side panel from the bright sky, Tesla stated. Various media outlets reported that while the driver could have disengaged the car’s auto-pilot technology and taken control of the vehicle, he was watching a movie at the time and apparently did not see the dangerous situation develop.

In addition, a recent NPR report on Uber’s Pittsburgh field test of self-driving vehicles that allow a driver to disengage the auto-pilot feature found that the cars have problems maneuvering around vehicles blocking a traffic lane. The cars also would not turn right on a red light when the auto pilot feature was engaged.

That is all on top of a Wired report last year on the susceptibility of autos to hackers.

Of course, these are early days for the technology, and we can anticipate that developers will work out its bugs, especially with federal regulators encouraging automakers to develop this technology. In March, the National Highway Transportation announced its nearly $4 billion commitment over the next 10 years to encourage further development of the technology. In addition, by 2050—the latest date some experts predict that self-driving cars will be the norm on our roads—a whole new generation of drivers not even born yet will have grown up with this technology and will make up a large segment of the driving public.

In the meantime, a significant portion of drivers are skeptical of the technology. As a result, will consumer advocates push lawmakers to require all automakers to provide drivers the ability to disengage the auto-pilot feature on self-driving cars? Already, in the wake of the Tesla fatality, a group of consumer advocates have sent a letter to President Obama seeking to end the administration’s “undue haste to get autonomous vehicle technology to the road” ahead of appropriate regulations to protect consumers. The consumer group also expressed concerns about Google’s fully autonomous vehicle.

All of this raises numerous questions for insurers as they examine and plan for the implications of self-driving cars:

  • How will federal regulators respond?
  • How will state regulators, who also have a say in the testing of the technology, respond?
  • Will consumers become more vocal and attempt to exert greater pressure on federal and state regulators to give drivers not only the ability but also the responsibility of taking command of driverless cars during emergency situations?
  • Will the insurance industry decide it should lobby lawmakers to pass regulations requiring automakers to give drivers the ability to control their self-driving vehicles?

Depending on how those questions are ultimately answered, future drivers could have more control over and responsibility for how their vehicles perform in traffic. And that should soften the hit to auto insurers’ revenues.

Next time: Addressing future auto insurance revenue losses now.

Also in this series:

  • Self-driving cars might not hit auto insurers’ revenues
  • Quite as hard as estimated

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