Driverless Cars Could Save Lives but Kill Companies
The automotive and tech companies developing driverless car share a ultimate belief that autonomous vehicles will benefit society. They will eventually save most of the nearly 33,000 people each year killed in road accidents in United States alone. But while they could save lives, driverless cars will also kill a series of industries and businesses, particularly in the auto insurance area. Self-driving cars will likely force auto insurers to rethink their business models and will creates long-term challenges. Some insurers already think about selling policies for self-driving car and they offer free car insurance quotes.
“If the situation was reversed, and we had automated vehicles today and someone proposed to let people drive cars, what would the reaction be?” asks Glen De Vos, vice president of global engineering for Delphi Automotive PLC, a supplier of driverless-car technology.
“You would be basically asking that 33,000 deaths per year be allowed on highways as part of a policy plan. There’s no way on earth anybody would accept it.”
The big win for society wouldn’t be big, or even a win, for everybody, however. If fully driverless cars (“L4” vehicles under the American government’s classification system) can be summoned with a smartphone just like Uber cars today, many people might forgo car ownership. Or families in developed nations might own one car instead of two.
That could be a financial boon for families. In the United States, cars are usually the second-largest item in the household budget, even though studies show they sit idle 90% of the time. But automakers would suffer.
People who drive taxis, Uber cars, transit buses or delivery trucks would be losers. The number of jobs lost in the U.S. alone could total 2.6 million, or nearly 2% of the work force, calculates economist Martin Zimmerman at the University of Michigan.
Eventually, widespread adoption of autonomous driving and automated accident-avoidance technology could weaken automobile insurers. The collapse of auto-insurance premiums in America and Europe as autonomous cars take hold would create a “giant, sucking sound,” Kate Brown, senior vice president of Swiss Re, told a recent conference on autonomous driving at the University of Michigan law school. Insurers would “make it up in China and India” and other emerging markets, she said.