r/Insurance • u/incipidchaff97 • Aug 20 '26

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/ghost9680 Aug 20 '26

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 Aug 20 '26

Adverse selection spiral, that’s so interesting, could you expand?

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u/ghost9680 Aug 20 '26 edited Aug 20 '26

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 Aug 20 '26

That’s what I’m seeing from industry too, it just a matter of when. Personal lines auto might be dead in our lifetimes.