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How driverless cars could injure insurers

Driverless cars

Driverless cars should cause fewer accidents, but...

Pretty much everything bad that happens behind the wheel today is our fault.

“Today, 95 percent of accidents are actually driver error,” says Robert Hartwig,  president and economist at the Insurance Information Institute, an industry association.

When cars drive themselves, he says, people hope to see a lot fewer accidents.

“The data seems to support that these cars will be better drivers than most people, because they don’t get distracted, they don't turn around and talk to their kids, they don’t play with their cellphone," says Chris Shultz, deputy commissioner of community programs and policy initiatives at the California Department of Insurance.

And while you might think this would mean cheaper insurance policies, Schultz says the future of auto insurance has actuaries getting anxious.

“We might see decreased frequency of collisions, but increased severity,” he says.

While policy holders might pay less, because your car is involved in fewer accidents, you might pay more because the cost of high tech repairs is higher.

Then, there's the liability question.

"What happens if I put my five-year-old in the back and press the button and say 'drive my five-year-old to kindergarten'? I don’t think any policy makers know what to do with that yet," says Schultz.

“The question really turns into 'who is in control of the driverless car?'” says Frank Douma, a research fellow and associate director of the State and Local Policy Program at the Univeristy of Minnesota's Humphrey School of Public Affairs and a research scholar at its Center for Transportation Studies.

The answer, says Douma, could mean analyzing data from the car after an accident – looking at its black box.

But while the knowledge may prove a relief to no one but insurers, self driving cars still have classic problems, in which liability is clear.  So although we can expect to see a significant number of autonomous cars on the road by 2020, Robert Hartwig says, don’t plan to cancel your insurance policy.

“Cars could still be stolen, trees could still fall on your car.”

About the author

Sally Herships is a regular contributor to Marketplace.

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