Car insurance is dead ?

05 Feb 2015

Have you ever heard of “self-driving car”, “smart car” or “autonomous car”? This revolution has forced us to rethink car insurance.

According to Wikipedia, the autonomous car is defined as a car capable of driving automatically and autonomously in real traffic and on non-specific infrastructure without the intervention of a human being.  Cars will be able to drive themselves, thus avoiding human error.  They will be interconnected to interact with each other in order to reduce traffic jams in urban areas, reduce the number of cars on our roads and thus significantly reduce the risk of accidents. But what about car insurance and whose fault is it if there’s an accident?

Future and car insurance

Google, a pioneer in this field, has been investing millions of dollars in research and development of this product for several years now.  Legislation has been amended in some US states to allow testing.  In 2014, Google announced that it had travelled more than a million kilometers and was involved in only two accidents… caused by human error!  There is also a rumor that Apple also has a team working on a similar project.   Car manufacturers are also investing in research.  Volvo predicts that it will be able to eliminate accidents for everyone driving one of its cars by 2020!

Since this revolution in the auto industry will have the potential to save millions of lives and millions of dollars in property damage, insurance companies will have to make choices.  Initially, they will surely be reluctant to accept the idea of a “driverless” clientele.   Remember that, car insurance is a very conservative industry.  Perhaps they will refuse to buy auto insurance without a driver altogether. When the autonomous car will take a more important place in our daily lives, they will have no choice but to adjust.

Considering that human error is one of the most important factors in your insurer’s analysis today and that this technology will virtually eradicate it, your auto insurance premium will go down.  Of course, there will always be circumstances where car insurance will be relevant, such as in the event of theft or fire.  However, the auto insurance market will experience its greatest revolution.  The volume of the industry will decline to a level never seen in modern history.

Each revolution brings its own opportunities

This window may allow Google or other companies with almost unlimited financial resources to provide auto insurance at a very low cost. Automobile manufacturers will eventually be able to include automobile insurance as part of the vehicle purchase transaction?  Will the insurer offer free auto insurance combined with home insurance?  The possible scenarios are countless!