Could car insurance be on the road to obsolescence? A new report predicts that futuristic robot cars and widespread advances in safety technology could eventually drive auto accident rates down to zero or close to it and cause insurance premiums to plummet in the near future, or even end auto insurance as we know it.
But industry insiders are saying, "Not so fast."
Donald Light, the researcher who authored the report for consulting firm Celent, calls the end of auto insurance a "provocative, but plausible scenario for the not-so-distant future."
Technology has put safety in a higher gear
Light points out that technology already has played a big role in driving down the number of accidents and fatalities over the decades. Seat belts, air bags, and anti-lock braking systems, along with tougher safety laws and enforcement, have all contributed to safer roads, according to Light. He cites some dramatic National Safety Council statistics:
- In 1980, there were 53,200 auto fatalities; by 2009 that figure had fallen to 35,900.
- Over the same 29-year period, accidents dropped from 17.9 million per year to 10.8 million.
The report says four emerging technologies could make crashes and fatalities even rarer, virtually wiping out the risk of accidents:
- Telematics is a catchall term for systems that track driver behavior. Today, some cars are equipped with onboard devices like the "black boxes" on planes. They record information such as speed and rate of acceleration, which can be used in setting car insurance rates or to determine liability after a crash. Light believes if that same information could be relayed to the drivers in real time, it could help improve safety dramatically by alerting motorists to unsafe behavior before they cause a crash.
- Collision avoidance refers to a category of car features designed to warn drivers of an imminent accident. They include warnings when you leave your lane or get too close to another vehicle, or when another car enters your blind spot. Today, many car manufacturers offer these features on a variety of makes and models.
- Automated traffic law enforcement includes things like red-light cameras and the similar camera systems that ticket speeders. While they may not be popular, Light argues that they can help improve safety.
- Driverless cars, also known as robot cars, may be the most radical component of Light's report. Right now, Google is working on a prototype of a self-driving car, and last year Nevada adopted legislation that allows for testing on public roads. California, Arizona, Hawaii, Florida and Oklahoma are all said to be considering their own legislation to allow vehicles that do the driving for you.
Auto insurance in the rearview mirror?
The insurance industry doesn't argue with the idea that technology is making driving safer. "But bringing the accident rate down to zero, or even close to it, is years away," says Michael Barry, a spokesman for the trade group the Insurance Information Institute.
And when that day arrives, vehicle owners will still want to insure their rides, Barry says. "Remember, you don't have to have a collision to file a claim," he says. "A tree could fall on a parked car, or floodwater could damage a vehicle; those types of property claims can be very expensive, and there's no indication that cars are getting cheaper to fix."
Also bear in mind that driverless cars and other new technologies won't revolutionize driving overnight and could, in fact, make driving less safe in the short run, Barry says. Robot cars, for example, will share the road with human drivers, and there could be a period of increased risk, as man and machine adapt to being together on the same streets.
"If you're at an intersection, you can often tell what another driver is going to do by looking at them and reading visual cues," says Barry. "I'm not sure a robot can do that, so you can imagine a mixed-road scenario that could be even more complicated than things are today."
Lawsuits a risk, even for robot drivers
Washington, D.C., tort lawyer Thomas Simeone says even if a new era of robot cars really can bring accident rates to near zero someday, they're not likely to eliminate another reason for auto insurance: lawsuits.
"Accidents may be more rare, but without drivers the liability issues get a lot more complicated," Simeone says. "Even a simple fender bender would look a lot more like a complex product liability case because everyone would be pointing the finger at the manufacturer, who might in turn be trying to blame multiple vendors who made the software or hardware."
So are today's car insurance companies worried that robot cars and other technology will make them obsolete? "No," says Barry. "But they are keeping a close eye on anything that can reduce accidents."