Autonomous Robotic Driverless Cars will Dramatically Lower Insurance Costs

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Autonomous robotic driverless cars, of the type Google is pioneering, are supposed to deliver many benefits such as higher utilization of cars with fewer total vehicles, better safety, and lower commuting. A major additional benefit to consumers’ pocket book will be the dramatically lower car insurance costs.
Car Insurance in most developed countries is based on driver demographics and past driving history. For example, an adult with lots of driving experience will get dramatically lower insurance costs than a teenager who is just starting out. Similarly, there are other factors that influence insurance costs, such as DUI convictions, marital status, the type of car you drive, the state in which you live, etc.

When you have autonomous robotic driverless cars, these driver-based insurance pricing criteria will go away, and all consumers will get the benefit of the safest demographic. For instance, a teenager who has a DUI and whose current insurance costs are 3 to 4 times higher than a married female could see savings of $2000 or more per year. The rationale behind the savings is that there is no driver behind the car and the software driving the car will not be subjected to driver demographics and past driving history records as humans.

In addition to insurance being priced at the lowest demographic segment, the software itself could be a safer driver than a married female. This could lead to a further reduction in insurance rates. Industry research estimates savings of $400 billion in accident-related costs, which could be direct savings to consumers. These accident-related savings estimates are from 4.95 million fewer accidents, 30,000 fewer deaths, 2 million fewer injuries.

Car insurance may go the way of home insurance where the occupant of the house is not as important as the house location and the type of house. Perhaps, around 50 years into the future, insurance statisticians will find a way to vary insurance based on which software is driving the cars. After enough data, insurance company models may have enough data on which company (Google, Tesla, Nissan etc) has the fewest bugs leading the least crashes.

Parents with teenagers with the least driving experience may end up being the happiest about the lower insurance bills.