Did you dream of sitting your driving test in a virtual world while wearing a headset? Virtual reality is going to become huge, but I think it’s too late to affect the driverless car market. There is one industry that looks like it’s in trouble.
We’ve been asking what will happen to insurance for years. We’re finally beginning to get some answers. New technology will help the average person, but it’s going to hurt old school companies. Let’s look at why software will damage some auto insurers.
1. Tesla Has Been Selling Car Insurance
Tesla has been selling car insurance in Asia for a while? The only reason they haven’t been doing it at home is because it would cause mass hysteria. Tesla has an extremely high opinion of their software.
They believe insurance should be built into the price of cars. I doubt this is going to hurt large companies straight away, but it could affect smaller businesses offering insurance. Or, Tesla could be overestimating their technology.
2. We Know It Can’t Cripple The Industry
Let’s say driverless cars reduce accidents to zero. Are tech companies still going to pay out when someone smashes a car with a golf club? They’re only interested in anything related to their software.
Buyers will get insurance when they purchase a car, but they’ll only be covered when they crash. They will still need other insurance, so tech companies like Tesla are profiting by making your life more complicated.
3. Crash Rates Are Actually Plummeting
Nobody knows how safe driverless cars will be when they hit the roads, but we do know a small handful of insurance companies have experienced a tiny drop in claims. It’s obviously thanks to Tesla vehicles.
The National Highway Traffic Commission said Tesla crash rates dropped by 40 percent since Autopilot was introduced. Does it mean software will never fail in the future, because it’s what they are insinuating?
4. A Business Needs To Be Profitable
Brands like Tesla think they can put other companies out of business because their software is superb. Elon Musk should be praised, but tech companies developing driverless cars are in for a big shock.
Everything could suddenly backfire on them. Startups don’t have any experience offering insurance. Also, if their software malfunctions it could bankrupt them. Everyone will walk away if something isn’t profitable.
5. The Auto Insurance Industry Is ‘Dying’
KPMG seems to think 60 percent of the auto insurance industry will be wiped out in the next 25 years. Artificial intelligence wouldn’t make such a bold claim, so I think they’re looking for attention.
We all know insurance companies will need to adapt if they want to survive in the modern era. Maybe once they master deep learning and big data they’ll prosper. It will be driverless car companies competing to stay afloat.
Things Will Change For The Better
If you’re a driver your insurance premiums will come down. Even if you’re an insurance company, I’m sure you’ll use technology to your advantage. It looks like everyone ‘might’ be a winner once driverless cars arrive on the scene.