The question of responsibility in case of accidents by a self driving car must also be addressed and answered.
A point to be noted with regard to auto insurance is that prominent businessmen including two billionaires are of the opinion that self driving car will prove disastrous for the industry. Even if the auto insurance industry manages to survive, it will not be in its current form.
Prominent investor Warren Buffett and software entrepreneur Bill Gates spoke to a new channel on Monday. Both opined that insurance companies need to get ready for a major decline in their business due to the arrival of self driving technology.
The CEO of Berkshire Hathaway said that there was no question that anything that renders the car safer is bad for the insurance industry.
However, Buffett did admit that the auto industry had always strived to make the cars safer. They are the pioneers in seat belts and all. But, at the end of the day, if there are not going to be any accidents, what will be the need for insurance.
The first signs of this transition are already clear. At the beginning of this year, a voluntary agreement was reached between twenty leading car manufacturers under the aegis of the Insurance Institute for Highway safety.
The agreement called for introduction of emergency brakes in every car within the next few years. In fact, it is going to become a standard feature in all cars.
This feature is regarded as one of the most fundamental ideas behind the autonomous cars. Studies have revealed that emergency brakes can reduce the crashes from the rear by 40 percent. The crashes that do happen despite emergency braking are not as severe as they would be without the feature.
Bill Gates, however, said that it will be another 15 years until the new feature will be significant enough to make a noticeable dent in the insurance business. Even after the fully autonomous technology is in place, there will still be chances of crashes and collisions. This fact is even acknowledged by the carmakers.
Before there is a real impact on the insurance business, a key question needs to be addressed by industry professionals, lawmakers and consumers: who will be responsible if a crash occurred in a self-driving car?
Executives of at least two major car manufacturers have said that they will accept liability arising from a crash occurring due to their technology; however, as yet there is no concrete word from a single voice that would represent each and every car maker.