Insurers, Suppliers Face Potential Disruption From Autonomous Vehicles
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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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.
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.
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".
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.