Adoption of driverless cars may take longer than originally believed, giving auto insurers more breathing room

In all likelihood, self-driving or autonomous vehicles will someday become commonplace on North American highways.  The potential benefits of autonomous vehicles – in terms of accident avoidance, traffic reduction, improved productivity, and, of course, lower automobile insurance premiums – are enormous, and the underlying technology continues to evolve at a rapid pace.

It is becoming clear, however, that when it comes to widespread adoption of driverless cars, “someday” may be further off than originally anticipated.  New concerns about driverless cars are emerging, including:

  • The need to protect the privacy of autonomous vehicle users from intrusive data collection aimed at learning riders’ preferences and habits;
  • The lack of uniform standards for autonomous vehicle use on major highway systems, and the long lead times needed to develop and implement such standards;
  • The vulnerability of autonomous vehicles to hacking and even their potential use as weapons by criminals or terrorists; and
  • The economic impact upon everyone from auto insurers to truck drivers to parking garage owners.

In light of these and other concerns, a new consensus on driverless vehicles seems to be emerging, which is that they will, over time, augment and/or replace traditional vehicles, but that it will take longer for them to do so than originally thought.  Rather than 10 to 15 years, industry observers are now looking at 25 or more years before driverless vehicles come into general use.  That gives the P&C sector – which still derives a large portion of its revenues from automobile insurance – more time to adapt and find replacement sources of revenue.

One response:

  1. While the Personal Lines Industry may have 25 years, the question now is whether Commercial Insurance may now have to adjust first. In long haul trucking where two drives are often needed, the economics and security concerns of autonomous personal vehicles start to change. Self-driving trucks could have an ROI in under a year if they can save on a second driver, and with the primary driver still available, the security concerns are decreased. Regulation may also be simpler for truck use on highways, similar to the adoption of tandem trucks. So while Personal Lines may have time to adjust, Commercial Carriers need to prepare for possible changes in fleet, inland marine, and worker compensation.

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