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Will Autonomous Cars Be the Insurance Industry's Napster Moment?
An anonymous reader writes: Most of us are looking forward to the advent of autonomous vehicles. Not only will they free up a lot of time previously spent staring at the bumper of the car in front of you, they'll also presumably make commuting a lot safer. While that's great news for the 30,000+ people who die in traffic accidents every year in the U.S. alone, it may not be great news for insurance companies. Granted, they'll have to pay out a lot less money with the lower number of claims, but premiums will necessarily drop as well and the overall amount of money within the car insurance system will dwindle.
Analysts are warning these companies that their business is going to shrink. It will be interesting to see if they adapt to the change, or cling desperately to an outdated business model like the entertainment industry did. "One opportunity for the industry could be selling more coverage to carmakers and other companies developing the automated features for cars. ... When the technology fails, manufacturers could get stuck with big liabilities that they will want to cover by buying more insurance. There's also a potential for cars to get hacked as they become more networked."
Analysts are warning these companies that their business is going to shrink. It will be interesting to see if they adapt to the change, or cling desperately to an outdated business model like the entertainment industry did. "One opportunity for the industry could be selling more coverage to carmakers and other companies developing the automated features for cars. ... When the technology fails, manufacturers could get stuck with big liabilities that they will want to cover by buying more insurance. There's also a potential for cars to get hacked as they become more networked."
but premiums will necessarily drop as well and the overall amount of money within the car insurance system will dwindle.
You have no idea how this works, does you? How much you pay for a service has nothing to do with how much it costs to provide a service. It's a matter of how much the market will bear. Why else do you think there are rubes out there still paying for text messages?
And the auto industry has it good, at least here in the states... I don't think there is anyplace it's legal to drive without insurance. They got you coming and going.
"but premiums will necessarily drop as well"
What evidence is there for this statement? Insurance companies are not known for lowering rates. My rates continue to go up even as the value of my vehicles diminishes and I have 0 accidents, 0 claims and 0 tickets on my record.
Ain't nothing going to happen with autonomous vehicles until they solve the rain and snow problem. Maybe California doesn't have to worry about vehicles in precipitation, but the rest of the nation does.
the major advances in civilization are processes which all but wreck the societies in which they occur - A.N. White
With automated cars, taxis will become much less expensive meaning that fewer people will buy cars so fewer people will need insurance. 20 years from now things are going to be VERY different...
Auto repair shops
Gas stations
Auto parts stores
Taxis and Limos
Motor sports
Motor vehicle related advertising
None of these survive as they exist today. There's probably a dozen more.
as well as whatever profits the company can get away with
Insurance companies are regulated by the states which cap their profits. It isn't about what they can get away with, they get what they are allowed. That is the devil's bargain they make for being the provider of a product required by law.