Automotive

How will driverless cars affect the current car insurance industry?

In recent days almost all car brands are working on producing driverless cars and a few of them have already secured some advanced safety solutions. These include automatically keeping a safe distance from other cars or bikes but the technology to work the driver’s hand need to be on the wheel. Many detectors are involved and the role of one of them is to check if the driver is holding the steering wheel. Car makers are not the only ones expanding in this field. Tech enterprises also find this a golden opportunity. Why? Because of the options it offers. Google is currently ahead but rumour has it that Apple is also intent on entering the fray. Driverless cars could greatly benefit from advance apps and safety programs.

Google Self driving car

Google Self driving car

To this day, there has been no announcement of a date or official unveiling but we can tell from the news that keep surfacing that it could be soon or as many as 10 years in the future. The first projects will by default include steering wheels giving them double functionality and the possibly to still drive yourself if you feel like it and the conditions allow. It is without a doubt going to be the biggest change in the car industry history.

Autonomous car makers promise that they will also offer more security on the streets and more safety, reducing the number of car accidents to something close to zero. This all depends on how good the technology can do. This however, raises an important question. Multiple industries will have to revise their plans for the future because of this and will have to think of ways to innovate in order to not go out of business. The first that comes to mind is that of car insurance.

If the day comes that car accidents cease, is it possible that car insurance might become absurd or unnecessary? How will the arrival of driverless cars affect such a market? The answer is no. We know for fact that electronic devices malfunction all the time. It is very likely that just like the old cars, sometimes the driverless cars will also break. The technology is simply not there yet and even if the chances are marginally small, there will still be accidents.

Driverless Car Safety

Driverless Car Safety

However, technology already exists which enhances driver assistance even today and it’s increasing the safety of driving. This means that car insurance companies should already start working on renovating their business models as the market is evolving rapidly. This may also affect prices but the key is to focus on the factor that insurance will always be necessary, as there is always error, either in the human factor or the technological factor. It is only in theory that the human factor makes more mistakes.

For instance, with the appearance of autonomous cars, individual no claims bonus could seize to exist as it may become irrelevant with the passing of time. The business of insurance companies should already start preparing for the impact of this great change.

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