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Could Driverless Cars Impact the Insurance Industry?

Experts say that recent advances in technology could lead to a gradual but significant decline in the number and severity of accidents over the long term, as well as a decline in the cost of auto insurance...
January 15, 2014

Experts say that recent advances in technology could lead to a gradual but significant decline in the number and severity of accidents over the long term, as well as a decline in the cost of auto insurance. Advances include the increasingly prevalent driver-monitoring devices, collision avoidance systems and automated traffic-law enforcement, such as speed and red-light cameras, as well as robotic cars.

At this point, nothing is certain, but we are seeing more articles about efforts underway to develop “driverless cars.” These are more than just backyard tinkerers working on projects as a pastime. Just last month, Ford — in conjunction with State Farm and the University of Michigan — unveiled an “automated” research vehicle. The goal is to incorporate technology into vehicles to enable them to “communicate with each other and the world around them to make driving safer” and reduce congestion.

“If driverless cars become a reality, and if, as a result, there is a dramatic reduction in the number and severity of vehicle-related accidents, there is no doubt it is going to have a major impact on auto insurance,” said Loretta Worters, vice president for the Insurance Information Institute, an industry-supported research group. She doesn’t see it as the end of auto insurance, but “certainly companies will have to adapt,” with measures that could include expanding lines of businesses unrelated to auto.

Driverless Cars Could Hurt Insurers’ Bottom Lines (Chicago Tribune 1/12/14)

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