Financial research heavyweight Moody’s is forecasting a positive for drivers in the adoption of autonomous driving.
Moody’s Investors Services is forecasting that the rise of autonomous vehicles on the world’s roads should lead to a decrease in traffic incidents, which are widely regarded as the result of human error, though that is not likely to be a quick turnaround, and therefore a drop in the amount of money insurers pay out in claims.
“Widespread adoption of self-driving cars is still decades off, but it raises questions of what an auto insurer’s role will be in a world with far fewer accidents,” says Jasper Cooper, Moody’s Investors Service assistant vice president. “Regulators, lawmakers and courts will have to determine how liabilities are shared among insurers, automobile manufacturers, and technology companies.”
That controversy over who would be most responsible in the event of a crash is seen as the last hurdle to overcome in the mainstream adoption of autonomous driving, with many critics saying that litigation would go through the roof and see the courts tied up with cases involving many lawyers representing various clients, all trying to determine who should be held accountable for a crash.
But proponents of the technology say there likely won’t be many court cases because there won’t be as many crashes as there are right now. Contrary to what many enthusiasts are preaching, having a driver in control in an emergency driving situation is not the best thing for accident avoidance because a computer can react much more quickly to a need for braking, for example. Computer control will also maintain ideal distance between vehicles, relative to speed, in order to provide more time for reaction to emergencies, and improve the likelihood of avoiding crashes altogether.
Moody expects some autonomous or semi-autonomous control over vehicles by the 2030s (although manufacturers seem to be working to a deadline of 2025) with widespread use on new vehicles by the middle of that decade, and widespread use primarily on highways by the middle of the century.
And although that certainly bodes well for drivers and their insurance rates, it does not bode well for insurance companies.
"Accident frequency will fall sharply over time, and will ultimately translate into significantly lower premiums and consequently lower profits for auto insurers," the report said.
It won’t be a speedy transition, though, claims the report. Insurers are expected to reap in profits from not having to pay out in claims resulting from fewer crashes, but not to pass along those “savings” to consumers. Eventually, consumers are expected to see premiums drop as regulatory checks reveal a decline in repair and medical bills, which will mean less money coming in and a resultant drop in insurers’ profits and perhaps even see a cull in the number of insurers (since auto insurance is one of an insurer’s chief sources of revenue).