Self-Driving Cars Will Impact Auto Insurance Industry

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    In recent years, a small but growing number of companies have begun to test cars that can drive themselves automatically. The thinking among many experts is that within the next two decades or so, they’re likely to become more or less ubiquitous across the country and beyond. But with that understanding comes the implicit knowledge that such a technological revolution would likewise have a major impact on the auto insurance industry. And while these changes aren’t likely to be anything widespread in the next several years or more, it might still be wise for insurance agents to stay abreast of the topic so that they know how their jobs might change in the not-too-distant future.

    Google recently launched a program that will allow consumers to compare auto insurance rates across the country in the near future – right now it only serves California – and would likely be able to use such data to fundamentally alter the industry, according to a report from the Wall Street Journal. That, in turn, could help to inform the company about the kinds of rates people of a certain age driving a certain type of car can expect, and could one day lead Google to start offering auto insurance of its own.

    Where do driverless cars come in?
    The general consensus among experts is that when driverless cars gain ubiquity, auto insurance rates for consumers will plunge to extremely low levels, or that the need for such coverage will just become non-existent, the report said. That’s because liability will shift from drivers to software companies, as those would become the entities responsible for the operation of the vehicle in the first place.

    This kind of ubiquity might also lead to less auto ownership among the general population, and will trend more toward such cars being ordered like a taxi service for a relatively low cost on an as-needed basis, the report said. And because the accident rate when most or all of the cars on the road are automated could drop precipitously, the risk shifts even further away from consumers.

    Driverless cars could be used by almost every consumer within a few decades.Driverless cars could be used by almost every consumer within a few decades.

    What does this mean for insurers?
    One of the first major casualties here, then, will be the idea of who is at fault in an accident, the report said. As such, auto insurance will probably begin to shift more toward being like any other type of general liability insurance policy, carried not by consumers but manufacturers of these cars.

    The more insurance agents can do to understand not only the current realities of their industry, but also where it’s headed within the next several years, the better off they and their clients are likely to be simultaneously. The reason for this is simple: Agents who have the most knowledge possible can then impart that information to their clients and, potentially, improve their working relationships a great deal. That, in turn, should lead to higher rates of customer satisfaction, as well as better client retention rates that can prove so crucial to ongoing agent success.

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