Will Driverless Cars Kill Insurance?

My initial thought about driverless cars was that the tort liability system will kill the whole idea. But now I’ve heard more big thinking about what it could possibly mean to have driverless cars and I’m starting to think I might have gotten it backwards.

Consider how much of what we think of as the problems with cars are not problems with the technology but problems with human behavior as expressed through the technology: poor reaction time, sleepiness, texting, drunk driving.

We drive slower, make more mistakes and keep our cars nearer to us than we would with machines behind the wheel. Most importantly, we hurt more people than machines would.

Auto insurance is about 40% of the insurance market in the US and that is mostly driven by liability insurance: what you buy to pay for harm you do to others from behind the wheel. If less harm gets done, the market will collapse, in the sense that claims cost and premium will plummet.

Good for us all, of course, but a titanic shift in the insurance landscape.

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