[Upper5Percent]

As AV technology develops, driverless cars become safer. Advanced Driver Assistance Systems (ADAS) https://en.wikipedia.org/wiki/Advanced_driver-assistance_systems have been proven to reduce fatalities and we anticipate that higher levels of autonomy will reduce risk even further. With reduced risk comes a reduction in claims, so insurers are bracing for a reduction in revenue from premiums. Which they will resist with all their corporate might... AVs are also expected, to a significant degree, to shift vehicle ownership from large numbers of individual insurance customers with limited power to influence their premiums, to a few corporate owners with greater buying power. This too should force down premiums.

Insurers must also prepare for the new risks and opportunities, and develop new coverage models to address them:

• Cyber-security risk – AV systems could be vulnerable to hacking.
  
• Software or hardware failures – driverless cars shift the burden of liability from humans to manufacturers
  
• Communication infrastructure risk – AV relies on a system of communication between road infrastructure and other vehicles.

 

[Mister Dave]

Insurers must also prepare for the new risks and opportunities, and develop new coverage models to address them:

• The huge increase in cost per vehicle

 

[Barry]

A reduction in claims is not necessarily a bad thing for insurers. Claims are expenses to an insurance company. The only thing that has ever gotten insurance companies into financial trouble has been increases in claims. Insurance companies can easily adjust to decreases.

 

[DonC]

I never underestimate humankind. No doubt it will be able to have accidents regardless of whether the cars would prevent them or not! LOL

The other issue of course is the time horizon. The average vehicle stays on the road for 12 years. When these vehicles appear, you still have a long phase out before the vehicles without the safety features are off the roads. You see the problem now for insurers. New cars are safer and prevent or mitigate bodily damage but jack the price of repairs. Old cars are cheap to replace but result in higher levels of bodily damage, and they are more likely to pose safety risks. Together they create a situation where accidents per mile drive stay the same but costs per accident increase.

In any event, going back to what you can expect now, given the maximum time frame a CEO is five years, planning this far out in the future seems unlikely.

 

[Barry]

I think the cost of liability insurance for AVs will eventually become low, but the cost of liability insurance for regular non-AV cars will creep up as more AVs populate the roads... just because there would be more cars to hit that are expensive to repair/replace, as mentioned by Mister Dave. But again, insurance companies can adjust to that easily.

Maybe the people who need to worry are the bodyshop owners. But phasing in AV across the entire automotive fleet will take decades, so this should be pretty manageable even for them (many shops will phase out by normal attrition as people retire, etc.)