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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.

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6 Comments

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  1. Tobi Finkelstein

    To be frank, the idea of driverless cars does not sit well with me. I am sure I am not the only one who thinks this way. It also is strange to think that crash rates have declined. I have seen plenty of collisions around where I live. But it is no surprise that as a result, insurance companies have to make huge changes. Really, huge changes in their policies once these cars become mainstream. I would think since the technology is brand new, the rates would go up because I could see more crashes happening due to the fact that this technology is very new and will have plenty of kinks to work out for a while.

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  2. Paul Hardy

    Elon Musk once described the adoption of autonomous vehicles, somewhat like the battle for women to be equal with men in the workplace i.e. they have to work ten times as hard to get 10% of the recognition.

    As such he forecasted that there was no way the governments of the world would ever let self driving cars lose unless it could be proved they were ten times safer than a human driver. That day is some way off – cars can drive themselves right now, but there is no way you can say they are ten times safer, quite the contrary.

    Every time someone watches a movie in a Tesla instead of watching the road and the car crashes people say that is proof positive, though that was a mixture of Tesla advertising technology as “self driving” when it was no such thing, mixed with a driver so stupid they should not have been allowed anywhere near any sort of car.

    If and when that day dawns (when evidence suggest automatic cars are 10 times safer than humans), I think the shift will be unstoppable. At that point it will be the insurance companies that force people OUT of driving their own car as they will hike the premiums up. It will be like riding a horse on the road – you are still allowed to do it but it is a lot more difficult and expensive than it used to be. You can’t tell me you won’t have to have insurance on your self driving car.

    Some have even said that in the self driving world it would be uneconomic to own your own car and everyone will travel by dirt cheap automatic taxis, like in Total Recall. That would take a huge change in peoples behaviour.

    It’s all pie in the sky at this point really, but fun to speculate….

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  3. Jessica Braden

    What you said is 100% true. The old school insurance companies are going to die out fast if they don’t evolve with technology. Even though information like what you put out is out there, there will be too many of these companies that won’t listen and will remain stuck. Therefore, they will learn the hard way.

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  4. M. Berman

    I am so happy to hear this news. Insurance companies rip you off, and if this is the thing that will shake it up, then so be it! It’s nice to know that there is something to really look forward to in life.

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  5. Tammy Hutchinson

    Auto insurance companies will never die off. They will adjust their policies along with the evolving technology. I know very little about driverless cars, but I love the idea. That’s because I seriously hate driving lol.

     

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  6. Ruth Mary Anderson

    Wowie. I don’t know much about this. But all I can say is that this kind of technology is so brand new that it will be a long time before driverless cars are completey safe. I see accidents happening left center and right until it’s more advanced. In that case, insurance companies will charge more until accidents are less likely to happen.

     

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