Is the universe trying to tell the insurance industry
On May 8, the same day that Nevada granted Google the first U.S.
license for a driverless vehicle, the consulting firm Celent
released a report titled "A Scenario: The End of Auto Insurance:
What Happens When There Are (Almost) No Accidents."
takes a peek at what might happen to auto insurance rates once
computers are driving our cars. While that might seem far-fetched,
the technology is much closer than most people imagine.
And the payoffs could be huge: Accident fatalities eventually
could fall to fraction of current levels, experts say, and
liability insurance rates could plummet by as much as 80
Imagine the time savings if your car dropped you off at work and
then parked itself, or picked up the kids and drove them to
Traffic jams would be a thing of the past. According to Steven
Shladover of the University of California, Berkeley, only 5 percent
of a highway's surface is occupied when running at peak throughput.
Autonomous cars can drive just a few feet apart, cruising at
exactly the same speed, which would reduce gridlock and also
improve fuel efficiency.
The end of insurance?
But the biggest reason to consider autonomous vehicles (AVs) is
safety. Computers don't go to bars, don't text and react more
quickly than a race car driver. They enjoy a 360-degree view of
their surroundings and never get tired.
In 2009, there were 10.8 million car accidents that resulted in
35,900 deaths, according to the National Safety Council, and the
National Highway Safety Transportation Administration says 95
percent were caused by human error. While these numbers have been
dropping over the last decade, they will never match the numbers a
computer could achieve.
Brian Hayes in
suggests that a reasonable goal for AVs is to match the death rates
of railroads and commercial aviation. This would drop road
fatalities to 1 percent of their current levels -- instead of
almost 40,000 deaths a year, we would only have 400.
Some of the technology behind AVs is already working its way
into cars, piece by piece. (See "
5 safety features that do what drivers used to
Adaptive cruise control systems vary a car's speed to match
traffic. Blind-spot monitors alert drivers to hidden traffic.
Vibrating seats awake drivers who drift across lanes. But
automakers are working to bring together technologies that can
handle more of the decision-making of driving.
Audi and Mercedes recently demonstrated
Traffic Jam Assist
, which combines automatic steering and adaptive cruise control,
allowing the car to control itself up to 37 mph. Cadillac is
working on Super Cruise, a semi-autonomous technology that lets the
car handle the steering, acceleration and braking in many
Almost all automakers, in fact, are working on a semiautonomous
or fully autonomous vehicle. Audi sent one up Pikes Peak in
Colorado, and Google has logged more than 200,000 miles in its
fleet of driverless Toyota Priuses on highways, city roads and
winding mountain roads.
4 keys to nearly accident-free roads
What happens when computer-driven cars help to drop accident
rates almost 90 percent? Insurance premiums plunge, according to
analyst Donald Light at Celent.
In a recently released report, Light presents a scenario that
predicts that by 2022, auto liability premiums will drop 60 percent
to 80 percent from 2012 levels. The decline would be gradual, with
liability premiums dropping 20 percent by 2017 and collision and
comprehensive premiums going down 30 percent. The savings would
accelerate after 2018 as collision avoidance and automated traffic
enforcement became more commonplace.
That savings scenario hinges on the growth of four technologies
that already exist in some form:
- Telemetrics, currently used by insurers -- such as
Progressive's Snapshot -- to help determine pricing. In the
future, these devices may provide real-time driving information
and feedback to help make drivers aware of dangerous habits.
- Collision-avoidance systems, such as brake assist and
- Automated traffic enforcement, such as red-light cameras and
- Autonomous vehicles, foreseen in the Celent report as
becoming dominant in 2023. However, it could be much sooner that
we see them on the road.
But don't take off your driving gloves just yet.
Who is responsible for driverless cars?
AVs are currently legal only in Nevada, which requires a human
in the driver's seat. . (See "Robot cars: You can text, but you
can't drink.") California, Florida, Arizona, Hawaii and Oklahoma
are considering the matter. But once lawmakers allow driverless
cars on roads, liability almost certainly becomes the focus.
If your car fails to detect a slower speed limit, who gets the
speeding ticket? Will a computer respond to flashing lights and a
siren? What if your car is hacked or you download a virus?
And the biggest liability question of all: Who is responsible if
an AV crashes -- the owner, the auto manufacturer or the software
Some experts feel the liability that currently rests with
drivers could shift back to the manufacturer.
"The primary legal issue is the shifting of more legal
responsibility from the driver to the car manufacturer, seller and
servicer," says torts attorney Thomas J. Simeone of Simeone &
Miller in Washington, D.C. "Specifically, a driver may be able to
argue that a collision was due to the car not doing what it should,
rather than his or her error. What is interesting is that the
driver of the car will become a witness and will have an incentive
to testify against the manufacturer -- to shift legal
responsibility away from himself."
Others doubt that automakers would be willing to take on that
added liability, and say instead that drivers themselves could be
liable for poor maintenance or failure to download the latest
Possible solutions include adding insurance costs to the car, or
simply staying with the current system: letting insurers pay the
claim, then pursuing automakers in court over manufacturer
That might be easier all around. "If there is any chance of
[law]suits," says professor Robert W. Peterson of Santa Clara
University in California, car owners will want insurance of their
own. "Auto manufacturers that do not have a network of insurance
adjusters may be ill-suited to deal with the daily grist of auto