Insuranceciooutlook

The Autonomous Vehicle Revolution: How Auto Insurers Must Adapt

By Insurance CIO Outlook | Monday, June 03, 2019

FREMONT, CA: Automated vehicles have significant potential to change the lives of the people. As the name suggests, they are self-driving cars which do not require human intervention for navigation. Self-driving cars are the much-anticipated product of the machine-driven future that people have always dreamt of. They are expected to add convenience lives with added efficiency.

As per a report published by various sources, car accidents are going to decrease at a massive rate by the advent of autonomous vehicles. It is of the high chance that it is going to harm the auto insurance industry. Self-driving cars will bring down the price of the premiums as very few claims will be raised. Along with this, the insurance companies might also face a massive dip in business as there will be a decrease in need of theft protection coverage. With anti-theft features, which do not allow anyone other than the owner to operate the vehicle and state-of-the-art GPS tracking system, which enables the car to be tracked easily, the adversities related to theft protection for their vehicles will go down. Hence, the cost of premiums also will be cut down.

Though it is hard to ascertain the exact effect of the autonomous vehicles on the auto insurance companies right now, it is safe to conclude that the change will be gradual and thus insurers will have time to adjust and react to the changes accordingly. There are three significant areas where insurance providers can work in the future.

As the vehicles are going to become more automatic, the incorporation of hardware and software also will rise, which eventually will open the risks related to cyber crimes. This is one area auto insurers can start providing coverage. Along with this, a massive liability might arise because of the failure of auto-related sensors and chips, which can be covered by insurers.  Factors like cloud server systems, signals, and other safeguards that will be incorporated for the protection of drivers will offer a robust annual revenue potential in premiums.

There is no debunking the fact that the auto industry is changing. Along with this change, the auto insurance industry is also adapting to technological advancements and will continue to do so in the future.

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