Self-driving cars are on the brink of becoming a reality. Various car manufactures are increasing driver assist features with every new model being released and Google’s self-driving technology company Waymo is already having their self-driving tested in four states in America.
The reality of self-driving cars is around the corner but how will they affect the way and the amount we spend on car insurance? It’s natural to ask: “If I’m not driving the car, why should I pay insurance for accidents that cannot be caused by me?”
These are questions comparison website Hippo.co.za has already asked.
“Where previously insurers priced their premiums according to a driver’s history – what happens when there is no driver?” says Vera Nagtegaal, Executive Head of Hippo.co.za.
According to a report by EY titleled ‘The evolution in self-driving vehicles’, there are various aspects insurers will have to consider when self-driving cars becomes a reality.
These include questions around what risks will remain and which new ones arise, who will be the customer, how insurers will have to change their products, prices surrounding models that will still ensure profitability and the impact of regulation and legislation around insurance and road use.
Nagtegaal believes a shared manufacturer and owner model is what insurers will consider when assessing the risk implications of driverless cars.
“With this model, the manufacturer would assume all the risk related to software malfunctions that may cause accidents. The consumer would be responsible for other things such as the areas in which the car is driven or parked, what the car is used for, weather-related damage, and vandalism.”
Nagtegaal also points out issues of cybersecurity that will have to be taken into account.
“Like any other computerized system connected to the outside world, they are susceptible to hackers,”
Nagtegaal says adding: “To mitigate this risk, manufacturers will have to take steps to insure their vehicles against hackers.
“Theft would be an interesting risk to assess, especially during the claim assessment process, as a manufacturer would have to prove that the car’s system was not compromised in a way that made it easy for hackers to take control of a vehicle,” she says.
Despite all changes that will have to take place, the World Economic Forum anticipates that assisted driving and soon driverless cars will improve the economic benefits of consumers by over $1 trillion over the next ten years due lower insurance premiums and fewer accidents.
Advanced driver assistance is also believed to reduce collisions by 9% and saving an estimated 900 000 lives. This is due to reduced time in traffic, lowering chances of accidents taking place.
“The biggest challenge for manufacturers and insurance regulators will be to convince current drivers that self-driving cars will allow for safer and more controlled driving on the roads,” Nagtegaal says.