Do Driverless Cars Spell Doom for the Insurance Industry?

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Imagine a vehicle accident: You grab before another driver who clearly had the proper of way, causing him to perform into you. Typically, this might be a clear case for the insurance provider, but one thing differs: You’re driving an autonomous car and arguing that you will be not responsible for the accident.

Related: Are Self-Driving Cars BEST FOR Insurance?

What does your insurance company do? And how else can we expect the driverless car of the near-future to improve the insurance industry landscape?

This scenario and many more enjoy it have insurers and insureds alike wondering about the continuing future of auto insurance and taking into consideration the emergence of autonomous cars, which, of course, has already been possible. Tesla has introduced its driverless vehicle to consumers, regardless of the accident that occurred with a Tesla in Florida early this season, when the car’s autopilot feature didn’t prevent a passenger fatality. Actually, the development of autonomous vehicles is accelerating over the auto industry

Ford Motor Company, for example, says it intends to introduce fully driverless cars to the general public by 2025, and other manufacturers (Mercedes, Volvo, BMW) are creating their own test vehicles. To emphasize how real this technology is now, the federal government has recently issued regulations on autonomous cars.

Obviously, these vehicles already are promising big changes in the insurance industry.

So, will the insurance industry become obsolete?

One of many questions out there is if the industry will become obsolete: Why would we are in need of liability insurance for our cars if autonomous vehicles are designed to eliminate accidents and fatalities?

The automobile insurance industry generates vast amounts of dollars in annual revenue and supports a large number of jobs, therefore the disruption that autonomous cars pose is a definite concern.

Also, the existing speculation about the continuing future of automobile insurance rests on the assumption that autonomous vehicles will in actuality eliminate auto accidents and fatalities. But safety continues to be a big concern: Insurers still fear this industry’s new, unknown technology (How will the vehicles handle in high traffic? Can the vehicles be hacked? Imagine if the driver must take control of the automobile?).

Additionally, will the technology give drivers a false sense of security and for that reason result in accidents that otherwise might have been avoided?

Related: 4 Ways Driverless Cars CHANGES the Transportation Industry

Most argue these systems increase traffic safety and reduce distracted driving. Tesla CEO Elon Musk assures his “self-driving technology to be at least doubly safe as cars driven by humans.” Although the Florida fatality this season caused many to question the validity of Musk’s statement, the actual fact that just one single confirmed death has occurred in over 222 million miles of autopilot-mode driving by Tesla vehicles certainly seems a promising little bit of data.

It really is hard to dispute the safety great things about autonomous cars, but how about the benefits linked to your automobile insurance rates? In the end, if autonomous-car manufacturers can convince people that they will save well on their automobile insurance by switching, they will definitely raise interest. Based on the Insurance Information Institute, “Although you may don’t anticipate getting one, all individuals are likely to financially reap the benefits of self-driving cars.” How? It’s simple: Autonomous cars can make roads safer, meaning fewer accidents and fewer claims filed; and that may mean consumers will be less at risk, so insurance firms will have to lower their premiums overall.

If drivers think that autonomous cars will reduce the potential for accidents, the demand for automobile insurance will decrease, and insurance firms will have to accommodate that, too. However, this in no way suggests that insurance firms can be obsolete; people will always want to insure their belongings, especially something as valuable as an automobile; but traditional pricing models are bound to be affected.

So, if individuals are paying less for automobile insurance, what will which means that for carriers’ business models? Does the technology create more jobs or make jobs extinct? Although observers argue that the changes will occur slowly as time passes, and there is absolutely no immediate dependence on concern over the disruption of the automobile insurance industry, some think that you will have millions autonomous cars on the highway globally within five years.

The current presence of autonomous vehicles keeps growing quickly, and the insurance industry must acclimate. Although this technology does mean fewer accidents, in addition, it means an enormous influx of data requiring analysis. Observing these vehicles will require insurance firms to work with telematics software and data analytics, enabling them to streamline their processes.

The analysis of such data will demand huge resources for insurance carriers, will drastically change carriers’ business models and likely create a dependence on new jobs to investigate the info.

It really is an undisputable fact that the insurance industry landscape is drastically changing when confronted with driverless cars. But this will not spell doom and gloom for the industry. Rather, just as the industry has adapted to the growth of wearable technology, monitoring devices and the web of things, it will continue to adjust to advances like autonomous vehicles.

Related: Driverless Cars Won’t Make Roadways Perfectly Safe

It might just have to move faster than initially anticipated.