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January 14, 2021

The Shaping Influence of Autonomous Vehicles and a Global Pandemic on Insurance Providers

By Mostafa Razzak, Principal, JMR Connect

Mostafa Razzak Interviews Melanie Musson, a published insurance expert specializing in autonomous and electric vehicles. 

Hi, Melanie. Thanks for taking the time to connect with us today. Let’s jump right in!

MR: As more and more automakers get into the autonomous vehicle arena, how do you see the world of auto insurance changing?

MM: If a vehicle has a level of autonomy that still requires a physical driver paying attention to the road in the driver’s seat, insurance would probably continue similarly to how it has been. When a vehicle is fully autonomous, though, you should see a drastic change in insurance.

You can’t hold a rider responsible for the liability of their car over which they hold no control. In that case, the manufacturer will likely have to provide the liability and collision insurance for the vehicle, while the owner will be responsible for comprehensive coverage and uninsured/underinsured motorist coverage. 

MR: Will insurers calculate an overall cost increase or savings? Do you think fluctuations will only happen for autonomous vehicle owners?

MM: Insurance premiums are based on risk. Autonomous vehicle manufacturers claim – and studies back them up – that their vehicles are safer than standard vehicles. As a result, insurance rates should decrease for autonomous vehicles.

If a standard car owner’s risk of making a claim remains unchanged after autonomous vehicles become commonplace, their insurance premiums will likely stay constant. If, however, the increased number of autonomous vehicles is accompanied by a general decrease in accidents across the board, then rates will decrease even for standard vehicles. 

Some speculate that the more autonomous vehicles are on the road, the safer the driving experience will be for everyone. A safer driving experience equals less risk and less risk equals lower premiums.

MR: During COVID lockdowns, many insurers have offered givebacks as the overall mileage and accidents have dropped significantly.  Will autonomous vehicles continue this giveback trend?

MM: Autonomous vehicles will probably continue the giveback trend. Even though autonomous technology is booming and more and more vehicles are being tested and used, they’re still an uncommon sight across most of the country. 

Until insurance companies have actual data to back up predictions, they’re not going to offer refunds or discounts.

MR: Will the popularity of autonomous vehicles affect such drastic change in insurance markets that manufacturers may be able to simplify insurance in the future by offering it themselves?

MM: It’s likely that insurance as we know it could shift as autonomous vehicles gain popularity. Car owners shouldn’t be held liable for vehicles that aren’t under their control. So, it would seem that car and technology manufacturers will have to bear the responsibility of liability insurance. 

In addition to the liability issue, having the manufacturer provide insurance streamlines the car ownership experience. Vehicle subscriptions have skyrocketed in recent years.

People love having one payment for all their vehicle needs. Autonomous vehicle manufactures can appeal to that preference by offering their own insurance coverage.

Learn More about Insurance Givebacks at AutoInsurance.Org

Edited by Erik Linask
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