There’s no question driverless cars will have a huge effect on auto insurance companies. It’s been estimated that as many as 25 million driverless cars will be on our roads by 2035. There are over 200 million vehicles on our roads and highways now. In reality, with less cars on the road, means less premium to the tune of $25 billion in a $200 billion industry.
Most driverless cars will be owned by the manufacturers and ride-sharing companies. Already young people are not getting their
drivers license at 16 years old like we did. With the rapid changes in technology, it will be natural for them to have an alternative to driving themselves. As a result,they won’t have to pay for auto insurance or the cost of ownership of a vehicle. The good news is that this will happen gradually.
There are several stages of driverless cars. There will be 4 to 5 stages starting with the most basic being the adaptation of some autonomous features all the way to fully automatic with no driver option. The fully automatic driverless cars are what have insurance companies most concerned. This will result in fewer accidents there will not be as much need for auto insurance. I believe this shift to driverless cars will take longer than the experts predict. America especially has a love for cars that is embedded in our culture.
Insurance companies will have to find other sources of revenue. This could include cyber and product liability which insures for cyber theft, hacking and ransomware. The more autonomous cars are the more chance of being hacked. There could be a flaw in computer software or software failure. This will open up opportunities for the insurance companies to compete for this business.
Whatever happens over the next 20 to 30 years, I plan on being around for the ride!