How Autonomous Vehicles Could Change Transportation Insurance

Self-driving cars have been a hot topic for some time now, though much of the general public has shown concern about the safety of these vehicles. 22 states have passed legislation to authorize the operation of autonomous vehicles in order to encourage the safe development, testing and operation of self-driving cars, though many states still require drivers be present in the vehicles in the event the autonomous system fails.

In 2017, Arizona welcomed technology companies looking to test their driverless vehicles on public roads, with human safety drivers present. A March 2017 collision involving an autonomous Uber vehicle led the company to suspend testing temporarily, but they resumed only a few weeks later. A fatal accident involving another Uber vehicle the following year could have caused a major setback for the industry, but police officials noted that an accident “would have been difficult to avoid in any kind of mode (autonomous or human-driven)” based on the way the pedestrian emerged from the shadows into the roadway.

Despite a handful of reported accidents, autonomous vehicle makers ensure that self-driving cars have the potential to drastically reduce traffic accidents caused by human error. In California, for example, there have only been 34 reported accidents involving self-driving cars since 2014 – the majority of which were the fault of a human-driven car. According to the analysis done by Axios, autonomous vehicles were at fault in only four of the the 34 reported accidents, and only one of the four vehicles was reportedly in autonomous mode.

Self-driving technology continues to improve every day, as more autonomous vehicles are being tested by companies across the country. A prediction by Stevens Institute of Technology estimates that fully autonomous vehicles may make up nearly 10% (up to 23 million autonomous vehicles versus the approximately 250 million total registered cars and trucks) of the vehicles traveling on U.S. highways by the year 2035.

The effect that autonomous vehicles may have on the transportation insurance market is not yet known, but experts predict that as driverless vehicles become more mainstream, accident rates will drop and so will insurance premiums. Rather than human drivers assuming liability for traffic accidents, automakers will likely be held liable instead. In fact, several automakers including Google, Volvo, and Mercedes-Benz have already accepted liability in cases where their self-driving systems were found to be at fault in a crash. Automaker Tesla has taken liability one step further and has begun to develop its own car insurance program.

It’s highly unlikely that the transportation insurance market will die out completely, considering that close to 90% of vehicles are expected to still have human drivers 20 years from now. Still, insurance brokers and agents may want to spend the next few years researching autonomous driving trends and adjusting their business models accordingly. The rise of driverless cars will most likely not make human-driven cars completely a thing of the past, but rather add a new product to the market.


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