Nissan autonomous car prototype. Photo credit: Norbert Aepli/Wikimedia Commons
The automotive industry – including auto insurance providers – has arrived at a consensus: driverless vehicles are coming to roads near you. What’s less clear is when they will arrive. Although numerous jurisdictions around the world – including here in Ontario – have opened their roads to driverless vehicle testing, mainstream adoption remains an undetermined number of years away. According to the Wall Street Journal, KPMG has predicted wide availability of fully autonomous vehicles by 2025, while Deloitte has pinpointed the late 2020s. Consultancy Fehr & Peers, meanwhile, believes that up to half of American traffic will be automated between 2040 and 2050.
Much like airbags and seatbelts before it, autonomous technology will have a huge impact on vehicle safety. Volvo president and chief executive Hakan Samuelsson has called autonomous driving cars “the single most important advance in automotive safety to be seen in recent years,” and believes they will lead to “fewer accident, fewer injuries, [and] fewer fatalities.”
“If you look back at the way cars dramatically shaped the 20th century, that’s how autonomous vehicles will shape our lives in the 21st century,” said Barrie Kirk, Executive Director of Canadian Automated Vehicles Centre of Excellence in an interview with Insurance Business Canada.
Today, 93 per cent of motor vehicle accidents are caused by human error. With the gradual adoption of driverless tech, crashes are expected to decline by up to 80 per cent by 2035. And in situations where collisions are unavoidable, automated driving systems will work to reduce speed and mitigate damage.
Not all industries are looking forward to the coming influx of driverless cars, though: auto insurance accounts for more than 40 per cent of global insurance premiums, according to Autonomous Research. Last year, car insurers earned around $200 billion in premiums in the United States alone. Driverless technology puts that money at risk.
While agreed-upon numbers are scarce, experts are unified in their belief that self-driving technology will seriously impact the auto insurance sector. A report from Swiss Re and HERE Maps suggests insurers could lose $20 billion by 2020. Deloitte has predicted that US premiums will fall from $200 billion per year to a mere $40 billion by 2050. KPMG believes the industry could shrink by 40 per cent over the next two-and-a-half decades.
In addition to falling rates of motor vehicle accidents, insurers must cope with a changing auto insurance landscape. Liability is expected to shift away from drivers and towards manufacturers: Volvo, Mercedes Benz, and Google have all said they will absorb liability for motor vehicle accidents involving their cars.
“It is going to challenge our existing concepts of liability,” said XL Caitlin chief executive Mick McGavick in an interview with the Financial Times. “These are going to shift from being individual risks to systems risks. It is a whole new insurance pool that didn’t exist before.”
Until autonomous vehicles become an everyday reality, motor vehicle accidents are likely to remain a leading cause of death and serious injury in North America. If you or a member of your family has been injured in a car accident, contact Neinstein Personal Injury Lawyers today for a free, no-obligation consultation. We can help you file a personal injury claim or resolve auto insurance disputes.
Greg Neinstein
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