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from the don't-tell-them-about-motorcycles dept.
Like record companies at the dawn of online music file sharing, Allstate, Geico, State Farm, and others are grappling with innovations that could put a huge dent in their revenue. As carmakers automate more aspects of driving, accidents will likely plunge and car owners will need less coverage. Premiums consumers pay could drop as much as 60 percent in 15 years as self-driving cars hit the roads, says Donald Light, head of the North America property and casualty practice for Celent, a research firm. His message for insurers: "You have to be prepared to see that part of your business shrink, probably considerably."
Auto insurance has long been a lucrative business. The industry collected about $195 billion in premiums last year from U.S. drivers. New customers are the source of so much profit that Geico alone spends more than $1 billion a year on ads to pitch its policies with a talking lizard and other characters. Yet even Warren Buffett, whose company, Berkshire Hathaway, owns Geico, is talking about the long-term risks to the business model. "If you could come up with anything involved in driving that cut accidents by 30 percent, 40 percent, 50 percent, that would be wonderful," he said at a conference in March. "But we would not be holding a party at our insurance company."
The loss of revenue for the insurance industry gives me a sad.
(Score: 2) by morgauxo on Friday July 31 2015, @06:26PM
So long as getting run over by a car is harmful to a human being and so long as there is any amount of owner-control of a car there is still a huge liability issue. If I do something that results in my car harming another person or their property I may be sued. So.. we will still be required by law to carry insurance and honestly we will still need it because who can afford all those hospital bills if the worst does happen?
If anything I would think insurance companies would stand to gain because having to give payouts would become rare.
On the other hand if cars become completely, 100% automated then all that liability shifts to the auto makers. It seems likely that they will want to buy insurance. So, insurance companies will be competing for a much smaller group of customers but those customers will collectively need insurance for the entire load of liability that drivers once were burdened with! I would imagine that insurance companies would begin acquiring one another until there were only a few left but those few would be making all the money.
That's pretty speculative though, to think that all driver liability will go away.