By on March 6, 2015

Google Autonomous Clown Car Amid Wind Turbines

Work in the insurance industry? Ever wonder what life would be like insuring the owners of autonomous vehicles?

The Wall Street Journal reports insurers Cincinnati Financial, Mercury General and Travelers, along with supplier LKQ, are warning investors that autonomous technology would one day come to disrupt the way insurers and suppliers do business.

How? For insurers, decreased demand for certain policies, changes in policy marketing, pricing and underwriting, and predicting risk when the driver no longer drives. For suppliers, declines in accident rates and repairs from those that do occur, leading to less demand for parts overall.

Barclays insurance analyst Jay Gelb, however, says insurers would have plenty of time to prepare for the autonomous future, especially since such vehicles are more complex; thus, requiring more money to fix them. He adds that it was “hard to see how a product that has been in place for more than a century is just going to go away” because a different breed of vehicle is just now entering the development phase.

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28 Comments on “Insurers, Suppliers Face Potential Disruption From Autonomous Vehicles...”

  • avatar

    “It’s hard to see how a product that’s been around for a hundred years is going to go away” Tell that to Eastman Kodak.

  • avatar

    Plenty of money to be had insuring the manufacturers.

  • avatar

    They will find a way to gouge the populace, even if it means bleeding dry those of use who will put off self-driving cars until the bitter end.

  • avatar

    re: “He adds that it was ‘hard to see how a product that has been in place for more than a century is just going to go away’ because a different breed of vehicle is just now entering the development phase.”

    tell that to the horses that fell by the wayside around the turn of the last century.

  • avatar

    As our world stabilizes, change is increasingly threatening to those in charge. I can’t wait to see the modern bail outs for insurance companies that are too big to fail. Historically, a company that didn’t diversify with change simply died and their employees found other jobs.

  • avatar

    I don’t care how far autonomous car technology advances… there will always be some “less fortunate” people driving around in clapped-out hoopties with expired insurance (and probably plates) waiting around the corner to smack into your Google Car.

    • 0 avatar

      There are coverages for that. You’ll just have to buy more insurance.

    • 0 avatar

      During The transition to autonomous vehicles with a mix of manual and automated on the roads I agree. There will come a time when almost all vehicles are autonomous and one can envisage a time when individuals may not need a drivers license or maybe insurance even. Maybe the manufacturers will insure their products as any liability for error will fall on them.

      The first test of insurance will be with automated valet mode which is by all accounts one of the first features that will be implemented.. If I tell my car to go park itself and it does damage, who exactly is liable, I wasn’t even in the car. If some idiot hits my car as it parks itself how will my car exchange insurance information with aforementioned idiot?

      It’s gonna be intersting!

      • 0 avatar

        My approach is to build a robotic personal assistant that can drive. That way it can get out of the car and have a heated verbal exchange with the other robot. Then there’s the hassle of having to go and bail out your robot because he took a swing at the other robot.

    • 0 avatar

      Before that happen dash cam and RFID license check for ignition lockout would be mandatory. This would probably be a good thing for the society.

  • avatar

    “Work in the insurance industry?”
    Yep. But we have no P&C involvement (except for in Brazil). Insurance is segmented by companies doing life and health vs. those in the P&C market. Some do both, but they’re generally the larger ones.

  • avatar
    velvet fog

    If I’m not driving, why do I need insurance? If the car crashed it’s through no fault of mine. If I don’t own the car and it’s just a service shouldn’t the service provider be the one to carry insurance? Essentially I view it as riding in a driverless taxi.

  • avatar

    Actually who is really going to get hurt will be your local police departments and municipalities that like to use the public as ATMs.

  • avatar

    This is why I think the first driverless “car” will not be a car at all (as in it can only be used as a self powered trailer and no passenger). Then after a few years of lawsuits and insurance claims that changes the design, they’ll then start driving itself with cargo only (no passenger) for your errant, then after a few more years of no passengers, will the true driverless “car” arrive.

    It’ll take a couple decades to fix all the teething problems.

  • avatar

    I am guessing that these exact same words were uttered by buggy whip manufacturers when asked whether or not they were worried about the new “horseless carriage” fad.

  • avatar

    The autonomous vehicles we most need now are to replace the union thugs at the west coast ports.

  • avatar

    The only place I can see where an autonomous vehicle would have any purpose is traveling on the interstate, parkway, or freeway systems. Just as the TV show “The 20th Century” and the TV show “The 21st Century” envisioned; interstate highway systems where the driving was taken over by a system that was either in the pavement or along the shoulder.

    Why do people purchase an automobile? The primary purpose of automobile ownership is the simple act of driving. There have been a number of psychological studies over the years of the effects of driving on the driver. Autonomous vehicles will result in an elimination of the beneficial effects of driving on the driver and the society.

    Autonomous vehicles are another example of enabling technology that in the end provides questionable benefits. Autonomous vehicle could result in AI. Heed the warning of people that AI could result in the extermination of the human species.

  • avatar

    Was planning on posting an inB4 Polaroid/buggy whip, but looks like I’m too late for that.

    Reality is though, those aren’t exactly fair comparisons.

    The insurance industry is going to continue to exist so long as liability and loss can be hedged against. Driverless or autonomous cars shift things and might disrupt the industry somewhat but it’s not going to kill insurance companies any more than the move to paperless transactions killed the banking industry.

    • 0 avatar

      Exactly. The risk and actuarial numbers might change, but it’s not like risk goes away. I do agree that this will be a pretty significant change otherwise.

  • avatar

    How are the police going to cope with the lost revenue stream. Self driving cars can shuttle one home after a night of excessive drinking probably safer than a taxi robbing local municipalities of a pretty lucritive source of profits. If it works like my phone I can say “OK google…drive home” and pass out in the back seat.

  • avatar

    The police fishing for additional violations will also begin to disappear. Fewer bogus searches based on drug sniffing dogs or the “I noticed the distinctive smell of marijuana”.

  • avatar

    If they are warning about it, who are they warning? My guess is that it is listed as a risk factor in a regular, mandated filing. Like a 10-K. So it is on the list of everything that could happen (almost) that goes into these things.

    As far as insuring these things, someone has to own them and tell them what to do. The owner/driver will need the same types of coverage as now.

    If or as they have less loss exposure, prices will go down. But as long as they are wrecked, stolen, flooded, driven into people and things, etc. there will be someone who needs to fund those costs. Insurers are the logical firms for this.

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