Self-driving cars may be the future of automobiles. With Ralf Gathmann and Holger Stark, SPIEGEL reported on Alphabet’s research lab X several weeks ago. The scientists there complain that so far hardly any insurance companies want to insure the company’s autonomous vehicles – for good reason: Only a small part has yet been tested on public roads.
Here we provide you with ten tips for insurance of self-driving cars:
1. Insurers have to be able to calculate premiums
The basis for the calculation of insurance premiums are known factors, such as age, sex or profession. With self-driving cars, however, these factors are becoming irrelevant. A computer is driving the car after all – not a 65-year-old woman from Hamburg with poor eyesight. The insurer needs to know who is sitting in the car at any time.
To avoid that, some companies are thinking of switching to usage-based insurance (UBI). After all, this is already common practice with young car drivers. The more kilometers you make and the higher your risk on the road, the more you pay for your premium. This is the case if you drive your own car or get a taxi.
2 . Different legal principles apply to self-driving cars
To date, the basis for liability in case of accidents is still largely based on common law: The person who causes an accident with his vehicle is responsible for the damage. A computer generates no driving license, so it’s unclear who should be liable in case of an accident.
This is not the only legal uncertainty: If the car automatically brakes because it senses a danger, but the driver does nothing, then who will be responsible for accidents? The one who pressed the brake pedal or the one that failed to do so?
3. Semi-automated driver support systems are common in the motor vehicle sector
But even for semi-automated driver support systems, insurance law is not yet clear. So far, this was possible only in the case of professional drivers, but with the trend to increase automation in everyday life this will change in future. An example: There is currently a rental car company that rents out self-driving cars. The rental car company insures these vehicles – but only for the time during which a person at least 21 years old is sitting in front of the wheel as a so-called “safety driver”. If the safety driver leaves, or if no one was there at all, insurance goes off too.
4. Insurers must act more quickly
Because self-driving cars are new to many insurance companies, they will have to act much more quickly than usual. The major players in the market already had this problem with telematics: These devices can determine speed and style of driving. Using them, drivers can win discounts on their premiums – if they allow their driving behavior to be recorded.
However, the smaller players in the market are still lagging behind. They can’t place these devices into cars that don’t belong to them – they just have too few customers in this area. This affects almost all drivers with older cars, because telematics devices are currently installed mainly in new cars when sold.
5. The role of regulators is to develop rules
Insurance companies are the first who have to act, because they are already actively investing in self-driving cars – or want to do so at least. They create concepts for risk management and ensure that their employees are trained accordingly. For them it is important to bring home certifications as quickly as possible, because the competition is catching up – at least some countries seek to develop a nationwide framework.
The second group whose members plan to contribute are the regulators: In Europe they have set up a task force that focuses on insurance law and helps member states with suitable legislation. Here too, a uniform European standard for insurance is being looked for.
6. The transition to self-driving cars is irreversible
Self-driving cars are no longer science fiction, but a reality that exists today – even though there are still many obstacles to be overcome before they will be used in the mass market. However, this development is irreversible: Many car manufacturers already have plans for autonomous vehicles, and the main suppliers have already developed their products along this line.
7. A new insurance product is needed for self-driving cars
In future, a different kind of car insurance will be necessary: Comprehensive liability insurance can not cover all eventualities. Accidents with unmanned vehicles are still too unpredictable – the only thing that is certain is that hardly anyone will be insured for all risks.
8. Insurers are already becoming active in the market
As an example, one can take Allianz: The company has two subsidiaries dedicated to this topic, which were established at different points in time – one is called “Allianz DRIVE”, the other “Allianz NEXT”. The first is already active, the second one will be launched in the next few weeks.
9. Investments are great – even if premiums don’t rise
Insurers usually pay large sums for self-driving cars: Over the next ten years between $25 billion and $175 billion will flow into software companies worldwide. Even if this doesn’t lead to higher premiums in the short term, this will be bearable for insurers – but they should not wait too long.
10. New players are appearing on the market
Many new suppliers want to play an important role in future, either with their own software or hardware: Google and Tesla Motors compete with car manufacturers like BMW or Audi. They can’t do much about liability law, but majority rules in the insurance sector: If an insurer has invested heavily in self-driving cars, its expertise will be very sought after. The competition should therefore hurry; alternatively, they could collaborate with each other to make their products as good as possible.
What is an insurance product for self-driving cars?
The new type of car insurance will be necessary to cover all risks. traditional comprehensive liability insurance can not do it anymore.
What is Allianz NEXT?
Another subsidiary of Allianz created to focus on self-driving cars, will be launched in the next few weeks. (to be used as a sentence)
What is Allianz DRIVE?
A subsidiary of Allianz created to focus on self-driving cars, active now.
What is the only thing that is certain?
Accidents with unmanned vehicles are unpredictable– no one will be insured for all risks.
Who are the second group whose member plan to contribute?
The regulator, in Europe they have set up a task force that focuses on insurance law and helps member states with suitable legislation.
On The Whole
We hope you’ve found these 10 tips to be helpful in insuring the safety of self-driving cars. If you have any comments or feedback, please share below!