A research firm is predicting the death of auto insurance due to new and emerging technologies in the auto industry. Those technologies specifically include collision avoidance technology, telematics, automated traffic enforcement, and self-driving cars.
Google has been experimenting with the latter technology for at least a couple of years now and has even gone so far as to get license for testing in the state of Nevada. Telematics and collision avoidance technology have already been added onto some late model vehicles. These technologies can only get better.
But that’s not necessarily good news for the insurance industry.
Fewer accidents and the ability to prevent more accidents can only mean less revenue for insurance companies. After all, the product might not even be necessary any more in 10 or 20 years.
“In the near term, an auto insurer should be asking itself three questions,” says Donald Light, Senior Analyst with Celent’s Insurance group and author of the report. “First, how is it monitoring technology-driven changes in insured losses, (i.e., the progress of the scenario)? Second, do scenario technologies provide new kinds of data and analytics-driven changes in pricing, underwriting, etc.? And third, what should it do differently this year and next?”
And on top of that I’d add that long term, insurance companies might want to think of a different business model. Maybe collision insurance won’t be necessary in the aggregate. But what if telematics fails? Or what if something with a vehicle’s collision avoidance technology goes awry?
In those situations, the vehicle driver won’t be liable, but the auto manufacturer may be. The same could be said for self-driving cars. If the robotics function acts dysfunctionally leading to an accident, then the vehicle manufacturer or the maker of the robotics technology may be liable for any accidents. Insurance companies may find new customers.