“If there are no accidents, there is no need for insurance,” declared business magnate Warren Buffet in May, speaking of the potential impact of driverless cars on the insurance industry.
“Anything that makes cars safer is very pro-social and bad for the auto insurance industry,” he told CNBC.
But are his claims true? Do self-driving cars spell the end of the auto insurance industry?
We caught up with insurer Adrian Flux, which launched what is thought to be the world’s first publicly-available driverless car insurance policy earlier this year.
At the policy’s launch in June, the company said that driverless technology will become increasingly common in cars over the next few years, adding that more than half of new cars sold in 2015 featured autonomous safety technology.
Gerry Bucke, the company’s general manager, told Insurance Business yesterday that the policy had been launched with the vision of the future driverless world in mind.
“In truth, as a fully driverless car is not yet legal for road use in the UK – without keeping your hands on the steering wheel of, say, a Tesla – we launched this policy as a starting point for discussion,” he said of the policy, which covers a range of existing driverless tech features such as operating and navigation system failures, software outages and hacking.
Despite embracing driverless technology, Bucke admits that it is “clearly a threat to traditional models of insurance,” but says that right now the danger is not immediate.
“It will be a long, long time before every car on the road is a driverless car; there will be a lengthy period of transition with vehicles of varying autonomy sharing the roads, so there will be a need for accident insurance for some time yet,” he said.
“In the future, if there is such a time when all road transport is automated, and if the accident statistics fall to very low levels, then it’s true that the nature of insurance will change,” he conceded, but stressed that accidents are still likely to happen, meaning there will be a continued need for third party insurance – “albeit at a potentially much reduced cost.”
Overall, Bucke says, driverless technology is an opportunity for the industry to be at the forefront of new technology, and to be involved in shaping the new traffic and insurance regulations that will ensue.
“We believe there will still be insurance, it will just be different.”
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