2016-04-29

As you read this, driverless cars are being tested on roads all around the world and the experts claim autonomous vehicles will be commonplace by the end of the decade. Without drivers, the risk of human error diminishes, so will there be a need for motor insurance in the future?

Premiums Reflect the Risk

As Malcolm Tarling from the Association of British Insurers (ABI) told The Telegraph recently,

"Premiums always reflect the risk [...] if the development of new technology shows significant impact and reduces risk and makes vehicles safer, then that of course will be taken into account by insurers."

So, motor trade and general vehicle insurance will become cheaper? Maybe. One thing is for sure, the roll and nature of the insurer will change.

An Evolutionary Industry: Who Will Be to Blame?

During the testing period, there have already been a number of car crashes involving autonomous vehicles, so they're not completely without risk. If this continues to happen once mass marketed, it may become tricky for insurers to decide who is at fault. Would it be the manufacturer, software developer or the mechanic who serviced the car?

The Department for Transport are aware of this confusion and have previously made the statement that it will be working to provide "greater certainty around criminal and civil liability in the event of an automated vehicle being in a collision."

Besides general malfunctions, there is also the fear that a driverless car may be hacked. Wired magazine has already proven this is possible, as two of its security researchers took control of a driverless Jeep from a remote location and disabled its engine and brakes.

How Will the Insurance Industry Change?

With autonomous cars a good few years off, there is no certainty how the insurance industry will transform, however there are a number of likely options. One is to place liability on the driverless car manufacturer, but this could be complicated as a manufacturer may source software or parts from different suppliers.

Another option is for the insurance policy to cover the car itself, rather than the driver. This would mean premiums would vary depending on model and use, rather than current factors such as a driver's experience or no claims bonus.

Lastly, there is the suggestion of a government tax on autonomous vehicles which would ensure that every vehicle on the road is insured.

One thing is for sure, there will be a need for some kind of insurance and providers will have to adapt in order to meet the needs of the consumer and keep up with evolving technology.

In the meantime, you can use online technology to ensure you have the best insurance deal for your business vehicles. Compare with us today!