The impact of driverless cars on car insurance premiums

 

Until recently, the concept of driverless cars was more science fiction than science fact, but rapid developments within the industry could mean that within a few short years, these high-tech vehicles are appearing on highways around the globe. As well as changing the ways in which drive, this could have a major impact on our insurance premiums.

An industry with its foot firmly on the accelerator

Motor manufacturers and technology companies are working at full pace to make these sophisticated vehicles a reality. This summer, a new 32-acre safe zone called MCity was opened near to the University of Michigan. The site, which has been designed to replicate the workings of a real city, is being used to test driverless cars and a range of firms are involved with the project, including General Motors, Ford and Verizon. Meanwhile, a study released earlier this year by the Boston Consulting Group suggested that partially autonomous vehicles will “hit the road in large numbers” within the next two years.

Could insurance costs really halve?

But what does all of this mean for car insurance premiums? At present, drivers can scour the web and use specialist brokers like Chill to find car insurance at competitive prices. However, it seems as though in a few short years, the cost of all our premiums may be set to fall steeply. According to KPMG, the prices of annual premiums could fall by an average of up to £265 within the next five years as a result of this technology.

Speaking to the Daily Telegraph, head of auto consultancy at KPMG John Leech said:

“Insurance could halve once vehicles which communicate with each other and an ‘autopilot mode’ when driving on the motorway are developed.”

Reducing risk

This may seem too good to be true, but in fact there will be good reason for insurers to slash cover costs once self-driving cars arrive on our highways. The vast majority of road accidents are caused by avoidable human error and the new, advanced vehicles would be able to eliminate this ‘bad driving’. Accidents caused by tiredness, aggression, risk taking, lapses in concentration and poor judgement would all decline as the number of self-driving cars increased on our roads.

Watch this space

For the time being driverless cars may still be in their infancy, but keep watching this space; these advanced vehicles could be with us en masse very soon and when they are, our insurance premiums could plummet.


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