Auto insurance industry clueless on driverless cars
Car insurance companies are puzzled when Google driverless cars hit the roads in some areas in America. Some of the alternate plans include the extension of the insurance coverage to mobile phones as well as the carmakers for the expenses in case one of the features of the driverless cars crashed.
Auto insurance firms are calculating how much premiums they will lose when driverless cars strike auto sales in the coming years. Mentioned in a report from Fortune, insurance companies like Mercury General, Cincinnati Financial and The Travelers Companies cautioned against the dangers that can be inflicted to the industry when autonomous cars dominate the streets. These vehicles will affect the way they do business.
Cincinnati Financial noted that driverless cars will tear down the insurance market because it will reduce the need for insurance products. Mercury General agreed, citing usage-based insurance and autonomous cars could change the way how the insurance are being funded, priced and promoted.
Health insurances could also relinquish profits as car-related injuries slumped by 40% and policy holders dropped their payments by 27%.
Car insurances which receive over $200B premiums every year are seeing 90% lost as the number of accidents will be deteriorated, Road Warrior Voices remarked.
Despite all of this, autonomous cars have lots of benefits. Google Self-Driving Car website stipulated that 94% of car accidents that kills 1.2M people every year are because of the driver's fault.
According to CBS News, Google driverless cars had not been in any crash in the past. The company had recorded only 14 minor accidents in six years of road testing in 1.9M miles.
For now, Tom Wilson, CEO of Allstate is thinking of extending its coverage for smartphones as an alternative. He's also planning to use the data the company had obtained from its customers to offer rewards for safe driving and send them coupons. Furthermore, it's possible to cover the car manufacturers in the future. They would want to get funded for their liability if a feature of the automated car crashed out.
By 2035, it is forecasted that self-driving cars will get the 25% of the global car sales. Car insurance companies still have a long time to patch it up.