By Chris Gillock
Valerie Raburn, chief innovation officer of insurance services at Xerox, wrote an insightful piece on the Opinion page of the Monday June 8, 2015 edition of the Wall Street Journal regarding the possible impact of self-driving cars on the world of automobile insurance. (http://www.wsj.com/articles/the-self-driving-car-and-the-coming-revolution-in-auto-insurance-1433715535. ) She points out that broad acceptance of driverless cars will mean that:
- Ordering a vehicle form an unmanned car service will be cheap and convenient;
- Fewer people will buy cars;
- Companies that run the unmanned car service will own and insure the vehicles;
- The accident rates for unmanned vehicles will be much lower since human error (and impairment due to alcohol, texting, exhaustion) will be eliminated;
- Auto insurance claims and premiums will drop and the $150B of annual revenues received by the auto insurance industry could shrink significantly;
- The cost of insurance for driverless cars will just be bundled in the cost of the unmanned car service;
- Auto insurance on unmanned vehicles will look a lot like general product liability insurance.
Insurance is only one aspect of the automobile sector that could be disrupted by driverless cars, of course. The sale of personal automobiles could drop significantly, and all of the ancillary products associated with personal automobiles would follow. Auto loans, vehicle service contracts and auto parts retailing could all be shaken if unmanned vehicles become a reality. Will Google or Uber morph into an automobile OEM? NPR did a story on this last year:
Could automotive transportation become another utility bill for consumers? No cars in the garage, $200/month for unmanned vehicle service with extra charges if you exceed your base level of usage? The model could be the data plans offered for wireless service by the telecommunications industry. The banking/finance sector would feel the impact as consumers stop borrowing money to buy cars. Hey, it might even be easier to find a parking space!
The mind boggles.