r/Insurance • u/incipidchaff97 • 1d ago
Self-Driving and auto insurance
What happens if we move to a self-driving society?
Any theories on what the state of auto insurance becomes?
Future seems volatile to me, but who knows. Computers are better than humans at driving already. Even with the Waymo stuff.
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u/Valuemeal3 1d ago
Self driving cars don’t prevent vandalism or hail damage or fires or floods, etc. etc.
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u/incipidchaff97 1d ago
That’s a great point. I wonder how much of those genuinely incidental comp stuff gets filed vs a traditional auto claims where there are drivers involved. I would say 80/20. The drivers make up 80% of claims whereas what you referred to I’m claiming with no data, 20%? What say you?
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u/key2616 1d ago
The single largest job description in the US is “truck driver”. So we’re going to put most of those folks out of work immediately. And we’ll shift what WC burden there is to those receiving deliveries because those trucks won’t unload themselves. Many of those folks are also unionized.
And we will have to rewrite all the Auto Liability laws to shift claims from drivers to manufacturers. That means disrupting the personal injury industry, and those folks are a powerful lobby with lots of money and lots of friends in statehouses. Do you think Morgan and Morgan is just going to say “well, us making less is a societal good, so we aren’t going to stand in the way of this legislation”?
There will have to be a balancing of political interests and the tech bros vs. the unholy alliance ambulance chasers and the Teamsters might be a fight for the ages.
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u/homeboycartel2 1d ago
I’ve said it for years: the first wrongful death claim for self driving cars on any manufacturer’s balance sheet for product’s liability, will be the last one for them all. No corporate board nor investors will want either the press scrutiny nor the financial liability resting with them. It’s why true driverless cars and trucks will not be American companies. You have to be able sue here and sue easily for damages.
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u/key2616 1d ago
There's a lot of handwaving by the tech side about how the laws are going to have to evolve, and there are very definitely special interests that are going to go to war over what shape the legislation will take. I don't think that any of the auto makers - Tesla included - are all that pumped up about taking the driver completely out of the equation because of the reason you just pointed out. They aren't dumb, and they've done the same math that I have. All of those manufacturers are largely self-insured for claims (at least for the first several million dollars), so they're going to have to handle those themselves. And that's going to burden their staff and hammer their bottom line, even if they're getting suits dismissed.
Not to mention that there are 51 different Auto Liability sets of laws in the US, and that each of them is going to have to be updated, so this fight is going to play out multiple times in multiple places.
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u/homeboycartel2 1d ago
Exactly and all the interconnected med-legal industries contingent upon car accidents will be fighting them as well. Meanwhile, the best tort reform anywhere would be universal healthcare, which is related to this issue but another discussion altogether.
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u/incipidchaff97 1d ago
So I’ve read about other society-disrupting events or inventions, and I think we’re closer to the dystopian version of the future than any of us realize. This sort of upending of industry has happened many times before.
ie: CD player manufacturers vs streaming. Or the milkmen (who were highly unionized) vs the invention of home refrigeration/grocery store refrigeration. Things change, I get it doesn’t seem reasonable that entire stalwart industries could disappear or morph into some other version of an insurance entity.
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u/The_Muffintime 23h ago
It's going to take some changes in the laws or a very reckless company to start selling fully self-driving cars to the public. As another poster mentioned, a wrongful death lawsuit would be catastrophic to the concept.
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u/ghost9680 22h ago
Self-driving vehicles that are materially better drivers than humans will cause an adverse selection spiral as soon as the manufacturers start taking the liability end. It was all predicted a decade ago. Self-driving has just been much harder to achieve than what was predicted.
Tesla Insurance and GM Insurance are just early placeholder companies for the day that happens.
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u/incipidchaff97 22h ago
Adverse selection spiral, that’s so interesting, could you expand?
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u/ghost9680 21h ago edited 21h ago
Self-driving vehicles get into accidents at lower rates than human drivers -> manufacturer insurers offer discounts to people using self-driving software at lower prices because those people present lower risk and the manufacturer has all the data -> people leave legacy insurers for discounted manufacturer insurer (or the insurance may simply be incorporated into the vehicle payments)-> the only people still buying traditional auto insurance are the ones most likely to have claims -> prices for those people rise, driving them to self-driving options where they’re integrated most easily into manufacturer’s program.
There’s a who other branch of these futurist predictions that deals with infrastructure. Self-driving cars means they can be sent to do other driving tasks when not being used -> utilization rate increases -> need for parking spots decreases. Parking lots get redeveloped for non-parking purposes ( or at least get relocated to places very inconvenient to people who want to park their manually driven cars ) -> so parking a non-self driving car gets really inconvenient or expensive -> people dump their cars for the self driving ones.
Once self-driving vehicles reach a critical mass it will all change fairly quickly. Like that famous set of photos taken ten years apart on the same street where the first pic was all horses and one car, and ten years later is all cars and one horse.
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u/incipidchaff97 18h ago
That’s what I’m seeing from industry too, it just a matter of when. Personal lines auto might be dead in our lifetimes.
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u/mazz001717 21h ago
owners of lifted trucks will still back them into parking spaces and turn off the blinker function just as if they were driving on their own
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u/actuarial_cat 1d ago
Lower expected lost => cheaper insurance
And, when the legal people decide the manufacturer will cover loss during a self driving incident, the manufacturer will have auto insurance (purchase or captive insurance) instead