Will autonomous cars spell the end of the insurance industry?
By Martin Wedge
Wednesday, April 1, 2015 - 11:58
One of the autonomous cars currently being trialled
Will autonomous cars spell the end of the insurance industry, asks Martin Wedge.
Are we all a little confused.com, or does the insurance industry have an insurance policy about its own future?
New research commissioned by the Society of Manufacturers and Traders (SMMT) predicts that a quarter of all new cars sold by 2030 will be capable of autonomous driving while, according to KPMG the motor insurance industry will be ‘disrupted’ as safety improves and driver behaviour and accident event data becomes more widely available. Premiums are expected to fall and liability will shift from drivers to manufacturers.
‘The Connected and Autonomous Vehicles: The UK Economic Opportunity’ report carried out for the SMMT by KPMG predicts that traffic accidents will be reduced by more than 25,000 a year with the introduction of driverless cars which, in turn, are expected to boost the UK economy by £51 billion. In addition, the introduction of autonomous technology accelerate to 75% of all new cars sold by 2040.
But although Government is expected to incentivise the take up of driverless cars, KPMG admits it will be many years before the numbers of autonomous vehicles overtakes the UK’s 30 million existing drivers.
However, the report also predicts that vehicles will be available that can be driven autonomously on the motorway as early as 2025, while highly autonomous and fully autonomous vehicles will not be available until 2030.
Premium brands like Jaguar Land Rover are expected to be at the vanguard of the new technology and vehicles with high autonomy technology will carry an additional cost of between £2500 and £2000 and full autonomy up to £4,500.
My question therefore becomes more philosophical. With liability shifting away from the driver and his or her behaviour, where does our personal responsibility begin and end? If the manufacturers are almost exclusively liable in the case of an accident? Do we no longer have responsibility if we have fallen asleep or are distracted by our smart phones or updating our social media? Or are we, by nature of the fact that the vehicles are autonomous – they actually think for us – encouraged to take our eye off the road? Not according to the DfT’s latest edict where drivers are expected to be in control at all times. Also, if it is a manufacturer’s liability, the payout to the harmed party could be a bottomless pit of litigation and the VMs would require cavernous pockets to fund damages in cases of system failure.
It is all still a little too vicarious and precarious as this will require horrendously expensive vehicles – the £4,500 extra may be conservative – or watertight insurance liability policies. So, it may be the case that the insurance industry will be echoing the words of Mark Twain who said: ‘rumours of my death have been greatly exaggerated.’
Martin Wedge is Managing Director at OVL Group, a specialist car leasing firm.