Question

We know that most auto accidents are due to driver error. If we move to self-driving (autonomous) vehicles we can expect far fewer accidents and injuries.

1. As autonomous cars become the norm and individual driver error becomes less of an issue, will auto liability insurance still be needed? How will it change? Please explain.  
2. How is insurance underwriting likely to change with the move to autonomous vehicles? How will telematics make a difference? Please explain.  

Answer 1

Ans.-

(a) Yes Autonomus cars less the accident but there are also chances of accident in autonomus cars so there is also requirement of Insurance.

As self-driving cars become the new normal, experts predict a sharp decline in accidents — over time, at least. There may be some initial hiccups as drivers and driverless cars mix on the road, since neither human nor AI drivers seem able to accurately predict what to expect from one another at this point. But eventually, there will likely be a downward trend in accidents. That’s a great thing, because an astonishing 37,000 people are killed in road crashes every year in the United States alone.

But we don’t need to wait for fully autonomous cars to hit the streets to see a reduction in accidents. Advanced driver assistance systems (ADAS) are becoming commonplace, and they show significant potential to decrease crashes.

ADAS will become increasingly common as the technology becomes less expensive and older vehicles are replaced. By 2025, as many as 40 percent of cars may have systems such as lane change alerts and forward collision prevention.

(b) Many insurers already offer premium discounts for these features, but as the effects of increased safety become apparent, insurers will need to lower premiums or risk being undercut by competitors.

In theory, removing human error from the roads means fewer accidents — which would also remove the need for private insurance that covers damage caused by drivers. In tandem, these two changes would lower accident liabilities and, theoretically, cause a huge drop in personal auto insurance premiums.

As it stands, auto insurers offer rates based on individual driving histories, and can even optimize each policy’s pricing via driver-approved telematics. As the insurance industry adapts to new technology saturating the market — turning drivers into mere passengers — the liability for accidents caused by autonomous vehicles could be handed off to the manufacturer, software designer, or even the government through the Department of Transportation. “At least the current thinking is that the manufacturers will be ultimately responsible for a lot of these future accidents when an automated vehicle is involved,” said Rick Gorvett of the Casualty Actuarial Society.