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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: 0) by Anonymous Coward on Friday July 31 2015, @06:49PM
There are hazards other than collisions (flood, tree falling, windshield nicks, door dings) to be insured against if the car is new, especially if there is a loan on it. Also, if self-driving cars reduce collisions and lower insurance costs, more people may actually buy insurance. In California, the requirement for insurance is very poorly enforced - if you don't have a loan, there only impediment to driving uninsured or underinsured is risk of discovery. Discovery is only likely in the event of a significant collision. Traffic stops include a cursory check for a piece of paper saying that you are insured - I have never heard of anyone checking the veracity of that paper. If insurance becomes inexpensive, perhaps many more people will buy it.
(Score: 2) by captain normal on Friday July 31 2015, @10:21PM
Actually in Cal, you have to show proof of insurance when you pay your car registration every year. The companies that carry vehicle loans require collision and comprehensive coverage. If your car is paid for and think you can carry your on collision repair or your car isn't worth the cost of the insurance you only have to carry the required liability insurance.
When life isn't going right, go left.