The End of Automobile Insurance?

05 Nov The End of Automobile Insurance?

There have been a lot of excited, ambitious and positive prognostications written over the last few years concerning the rapid advancement of autonomous vehicles.  I have written about the huge impact they will have upon the judicial system writ large, but a recent article by Paul Carroll (you can read it here) explores the impact upon the automobile insurance industry.  Specifically, that 1) the number of humans driving vehicles will plummet, along with the number of auto accidents and 2) the manufacturers of autonomous cars, like Google, Volvo and others, will start insuring their own cars and view it as a product liability claim.

The logic of Carroll’s article is sound, however, like others trying to predict the future, his guess that by 2025 or 2030 there will be no more auto insurance seems a bit aggressive.  It seems more likely that over the the next two decades perhaps car ownership will decline due to the combined effects of more people moving to urban areas and the rise of autonomous fleet vehicles.  Also, hopefully, number of traffic accidents will correspondingly decline, and over this period insurance companies will adapt their personnel levels accordingly.  However, I think that to deny the automotive industry along with those who insure and service automobiles are in for major business disruptions over the coming years, is to deny reality.

Subrogation, in particular, is in an interesting predicament if manufacturers of vehicles start handling claims of injury and property damage.  They would be cutting off subrogation rights since damages would be handled outside of the insurance arena.  However, it seems likely that vehicles will still allow for human control in the future, even in the decades to come, and that has the potential for error and subrogation opportunities.