Driverless cars and their impact on the auto insurance industry

Have you ever imagined traveling in a car without a driver? Driverless cars are likely to emerge as the most anticipated product of the present time. Let us find out the impact it might have on the insurance sector.

As the name goes, driverless cars mean vehicles that run automatically without a driver. This is a self-driving car that doesn’t require any navigation supervision and runs on its own with the help of an automated system. This car is expected to enable smooth traveling of people from one destination to another without any dependency on a driver.

A highly anticipated product, driverless car is likely to fulfill the dream of a machine driven future.  Along with efficiency, the driverless cars are likely to add convenience to the lives of millions. Due to their automated functionality, the driverless cars are also termed as robotic or autonomous cars.

Let us now discuss the various stages that the auto drive cars are likely to pass through.

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Stages Of Driverless Cars

The various stages of driverless vehicles can be separated in six different levels starting from zero and going till level five. Here, zero is the level where the conventional cars are being used, while five represents the level in which the completely autonomous cars are used.  At present, the level that the driverless cars are standing at is within zero and one.

Below is an explanation of the various stages of driverless cars:

• The first stage of driverless cars is the one where the cars will adapt to only some features of autonomous vehicles
• The second stage will have the vehicles fixed with two robotic features of cruise control and braking
• In the third stage, the cars will become somewhat autonomous but would require a driver’s regular supervision
• In the fourth stage, vehicles will become completely automated. However, they would still have a human touch, thereby allowing the driver or even the passengers in the car to control the machine if needed
• In the final stage the driverless cars will be completely automated with no human interference at all. In fact, these cars will not have parts like brakes, steering wheel or accelerator etc.

It is expected that self driving cars are soon going to become a reality. This is because, not just the automobile giants but even the technology conglomerates such as Apple and Google are taking interest in this sector and investing hugely in their growth and development.

Further, the industry has ignited a lot of curiosity and interest among the car enthusiasts.  At the same time, it has brought into fore a thought provoking question as to what impact these automated cars would have on the motor insurance industry and the premium costs of vehicles.

The Safety Mechanism of Autonomous vehicles

Technology is fast changing and progressing for the better. This has brought down the rate of deaths related to car collisions. Though the addition of many new safety related features in a car may not have changed the accident scenario much in the country, it has been able to bring a dip in the number of deaths caused by accidents.

With autonomous cars, you get the added safety features such as self parallel parking, lane assistance, GPS navigation and traffic jam assistance among others. There is a hope that these features are likely to cut down on the rate of car insurance premium. These security features are expected to lower the risks of driving a car, and motor insurance is nothing but bearing risks. So, it is expected that these features might bring down the cost of insurance.

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How are driverless cars likely to impact the motor insurance Industry?

As per recent reports, it is likely that the rate of car accidents will go down massively soon in the future by the mid of this century. If that happens, it will have a negative impact on the insurance industry. Further, driverless cars are also likely to bring down the premium price of car insurance with the decrease in claims. However, the liability insurance will continue to persist since most driverless cars would have manually driving options as well. But there would be variations in coverage.

So, overall there might be a setback faced by the insurance companies in terms of business. With advanced features like kill switch, which is an anti-theft feature only the owner of the car would be able to  switch the engine on.  Further, there would be advanced GPS to enable the cars for easy tracking.  Thus, all these are expected to cut down on the insurance premium cost in the future.

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Driverless Cars Insurance Policy

Despite the fact that the autonomous vehicles are likely to come up with several advanced safety features, it is still unclear if it will have any major impact on the auto insurance companies. So, it is yet to see if the new features will bring about any significant changes in the rate of premium.

As such, there have been many features already working in cars that help in avoiding vehicle collisions. These features are good in terms of assisting the drivers while driving the car but it couldn’t impact the insurance sector much. Moreover, it also couldn’t impact the number of accidents taking place globally, though the death rate due to accidents has reduced considerably.

How Insurance Companies Are Likely to Adapt To The Imminent Changes?

At this time, it’s too early to anticipate how India’s auto drive automobiles would affect the country’s auto insurance market. We can simply expect to experience gradual changes in the long run. Hence, insurers need to wait for the changes to act accordingly.

According to reports, future insurance development will need to focus on three areas: infrastructure insurance, product liability, and cyber security.

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To sum up 

Due to the introduction of autonomous automobiles in India, significant changes in the automotive and motor insurance industries are predicted. It is likely that the changes would be positive. There might be new liabilities in terms of product for the insurance companies to cover. We just can wait and watch if any significant change or reduction is likely in the insurance policies or premiums.

 

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