26 October 2016
Google, Tesla and BMW are all investing heavily in self-driving technology. Photo: Internet
Google, Tesla and BMW are all investing heavily in self-driving technology. Photo: Internet

Self-driving cars may pose threat to insurers

One of the key selling points of self-driving cars is the technology’s potential to enhance safety and drastically cut the number of accidents on the road.

But insurers may not be happy to hear about that.

In a recent talk in London, Volvo chief Hakan Samuelsson quoted research saying that self-driving cars can reduce the number of road accidents by 80 percent by 2035.

Even when there is a crash, devices such as collision prevention systems will be able to slow down the vehicle and prevent major injuries and casualties.

Swiss Re and tech company Here did a joint study on how the new technology may impact demand for car insurance. The research estimates spending on auto insurance will drop by US$20 billion by 2020.

Although the technology for full automation is not mature yet, global car makers and tech giants are racing to offer driving assistance systems of all sorts in their latest models.

Even investment guru Warren Buffett, who owns a substantial car insurance business, admitted in a CNBC interview that autonomous cars could upend car insurers.

“If there are no accidents, there’s no need for insurance,” Buffett noted.

But insurers are not ready to give up, the Hong Kong Economic Journal reports. Some argue that motorists could become less alert and focused when they over-rely on auto driving systems.

If there is an emergency situation that requires human intervention, they won’t be able to react fast enough.

Auto driving technology uses a lot of assumptions in estimating the movement of other cars and pedestrians.

Since those underlying data and formulas do not necessarily match real-life cases, accidents may still occur.

– Contact us at [email protected]


EJ Insight writer

EJI Weekly Newsletter