Is a driverless future just around the corner? Learn what’s next from Uber, Google and Lyft, and what these innovations mean for insurance.
Last year, Uber and Carnegie Mellon University jointly announced plans to open a $5.5 million “Uber Advanced Technologies Center”, an autonomous vehicle research center near CMU’s campus.
Just this January, General Motors announced a $500 million investment in Lyft, with the goal of creating an on-demand network of self-driving cars. Rumors persist that Google and Ford are entering into a partnership to build autonomous cars, although the hotly anticipated announcement at this year’s CES did not occur.
Is a driverless future just over the horizon? Not quite – Google’s still figuring out how to make autonomous cars safe, insurance underwriters are still struggling with how to insure driverless vehicles, and GM’s investment has yet to yield any tangible steps forward, for now.
Despite the ongoing hype, a fully driverless future may still be at least a decade or more away. Here’s why.
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Challenges to a Driverless Future: Liability, Insurance & Intelligence
Before autonomous cars go into mass production, questions of legal liability, insurance regulation, and artificial intelligence challenges remain. While human error accounts for at least 90 percent of all accidents, human judgment, experience, and instinct may also help prevent accidents, too.
For example, if we’re driving through a neighborhood and see a ball roll out into the middle of the street, we know to slam on the brakes since a small child might be close behind. Even with advanced artificial intelligence, would an autonomous car know to react this way?
Legal liability questions and insurance regulations could pose an even bigger challenge. Since the vehicle itself will make driving decisions, regulators, manufacturers, and government officials must still determine who will be at fault in the event of an accident.
Finally, how much will it cost to insure the vehicle? Today’s insurance system is based partially on driving record, with discounts often available to drivers with an accident-free or ticket-free driving history.
The frequency of use impacts car insurance rates, too. Even if you do not own a vehicle, many part-time drivers maintain secondary insurance (non-owner car insurance) to protect them and others in the event of an accident by covering costs associated with bodily injury and property damage.
With the rise of autonomous cars, would this type of non-owner insurance become a standard requirement? KPMG predicts that the disruption to insurance carriers will be profound, with a select set of winners and a far broader swath of potential losers.
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Autonomous Car Benefits: Reducing Accident Frequency by 80 Percent
Despite these challenges, autonomous vehicles offer mass appeal: they provide drivers with the ability to multi-task during commutes (finally helping us achieve an extra hour in our days?), travel more safely, and a greater level of independence, especially for individuals who may be unable to safely drive due to disability or health concerns.
Autonomous cars could also slash the number of drunk driving related deaths each year, as drivers would always have a safe ride home. KPMG estimates that a mass conversion to autonomous cars by 2040 could slash the frequency of accidents by 80 percent, potentially saving millions of lives each year.
Autonomous vehicles offer the potential a change so profound that both Elon Musk, the CEO of Tesla, and Chris Urmson, the head of Google’s self-driving-car project, liken this change to the elevator. Elevators changed how people moved through buildings and cities, enabling architecture to build up in new ways, creating the modern city skyline, reports Atlantic Monthly.
Elevators even shifted housing desirability from bottom floors to the penthouse– something unthinkable 100 years ago when top floors meant a long, inconvenient walk up multiple flights of stairs multiple times per day.
Today, taking an elevator is a completely mundane activity; a century ago, trusting our lives to a magical box that whisked us up into buildings would have been terrifying. Musk says in 50 years we’ll look back similarly on cars and marvel that we ever allowed humans to drive these, “Two-ton death machines.”
While the mass launch of autonomous vehicles may still be a decade away, industry analysts predict that a full move to self-driving cars could certainly happen in our lifetimes. Cars could become more like transportation pods, an inexpensive, basic vehicle available for on-demand use, following a car sharing model popularized by Uber, Lyft, and Car2Go. In the meantime, the insurance and automobile manufacturing industries must prepare for a major upheaval.