Driverless cars and the doom of auto insurance. Myth?

1. The US car parc is estimated at 250m. While self-driving cars may become more common place in the US, all of the cars already on the roads aren’t going to be replaced in under a decade.
2. The global car parc is estimated at about 770m. Replacement of some of the cars with driverless cars may begin to happen in mature economies like Europe or Japan. Globally, it ain’t happening in 10 years.
3. Automotive insurance covers more than just passenger cars. It includes two wheelers, three wheelers, 8 wheelers, 20 wheelers, light commercial vehicles, earth moving equipment, industrial and farm equipment. A large part of the non-passenger car segment isn’t going driverless any time soon.
4. While a large number of accidents seem to occur due to driver error, insurance also covers damage to the vehicle due to arson, flood, fire or a random tree fall. Considering these events are rare and risk from arson or fire is minimal, auto insurance premiums will come down substantially but insurance is here to stay.
5. A new class of unanticipated accidents could arise due to erroneous driver less systems, electrical short circuits or explosion of batteries. Some one has to insure for this class of accidents. Is it going to be car manufacturers or battery manufacturers?
6. Instead of insuring vehicles, insurance companies will move on to insuring occupants, property and other key components of the vehicle such as batteries or driverless systems.
7. In a critical area such as this, the lobby will fight hard with the government to ensure insurance remains mandatory at least until there is substantial data to prove the technology is robust and reliable to entrust human lives and property to driverless cars.
8. Around the globe, an estimated 3 billion commute to work every day. Advancements in technology, remote connectivity and secure data exchange may substantially encourage telecommuting, thus reducing travel by passenger cars or personal mobility vehicles.
9. Under constrained resources and towards promoting a greener planet, governments are already investing in next generation mass transit systems. Fewer cars means fewer insurance premiums.
10. If insurance premiums become super cheap due to reduced coverage requirements, a basic auto insurance policy could very well be packaged into other products and offerings such as credit cards – much like is done today with life insurance.

Considering the critical nature of the driverless systems, it is absolutely important that they are robust to handle any situation automatically or intelligently pass control to an already distracted driver. It will take time for the technology and infrastructure to mature for cars to be 100% driverless. More importantly, so long as the 770m driver operated vehicles continue to ply on the roads and the driverless enabled cars require human intervention from time to time, car insurance is here to stay.