A pivotal day for the insurance industry
7 October 2015
There were a few key assumptions underlying Celent’s End of Auto insurance report:
- Cars would crash less, requiring lower claims expenditure and lower premiums
- Cars would drive themselves, liability would shift to manufacturers and ‘driver insurance’ would be a thing of the past
Today with Volvo’s announcement (also linked here) that they would accept all liability for the car in autonomous mode we see the first of three steps towards the end of auto insurance. This is a key moment in human history, a pivotal moment that will redefine how human beings travel albeit that may not be apparent today. Today, this looks like an inevitable check box on the route to autonomous cars. It is in fact both.
Now the other manufacturers must follow suit or relegate themselves to manufacturing cars with no autonomous ability. Immediately, Blockbuster and Kodak come to mind. Initially they may deal with this through captive insurers but this will change over time.
I mentioned this is the first of three steps. The next inevitable one will take place in the court of law, perhaps after the first death where the car was liable. Here the specifics will be tested and understood. This will be a different milestone in different jurisdictions. The third step will be a few years from now, when the autonomous systems have had enough time to partially fail due to poor maintenance. I am assuming we still own the cars at that point we’re not just renting them by the hour. At this point clarity will be given to who is responsible for making sure an autonomous system is still fit to drive on the road. Governments and lawmakers will have to define a minimum capability that is required before one can turn on the system. In some countries it may happen sooner than others but one imagines this will be a reactive exercise as manufacturers challenge their liability due to customers meddling with or failing to maintain the equipment. As interesting and drawn out as these second and third steps are, history will show they are insignificant compared to the point in time when the first manufacturer stood up and said they would accept full liability for their cars when in autonomous mode.
Update: Other manufacturers are already following suit. and the Volvo CEO is already calling on the US government to establish testing guidelines as part of the speech.