Is the universe trying to tell the insurance industry something?
On May 8, the same day that Nevada granted Google the first U.S. license for a driverless vehicle, the consulting firm Celent released a report titled "A Scenario: The End of Auto Insurance: What Happens When There Are (Almost) No Accidents."
The report takes a peek at what might happen to auto insurance rates once computers are driving our cars. While that might seem far-fetched, the technology is much closer than most people imagine.
And the payoffs could be huge: Accident fatalities eventually could fall to fraction of current levels, experts say, and liability insurance rates could plummet by as much as 80 percent.
Imagine the time savings if your car dropped you off at work and then parked itself, or picked up the kids and drove them to soccer.
Traffic jams would be a thing of the past. According to Steven Shladover of the University of California, Berkeley, only 5 percent of a highway's surface is occupied when running at peak throughput. Autonomous cars can drive just a few feet apart, cruising at exactly the same speed, which would reduce gridlock and also improve fuel efficiency.
The end of insurance?
But the biggest reason to consider autonomous vehicles (AVs) is safety. Computers don't go to bars, don't text and react more quickly than a race car driver. They enjoy a 360-degree view of their surroundings and never get tired.
In 2009, there were 10.8 million car accidents that resulted in 35,900 deaths, according to the National Safety Council, and the National Highway Safety Transportation Administration says 95 percent were caused by human error. While these numbers have been dropping over the last decade, they will never match the numbers a computer could achieve.
Brian Hayes in American Scientist suggests that a reasonable goal for AVs is to match the death rates of railroads and commercial aviation. This would drop road fatalities to 1 percent of their current levels -- instead of almost 40,000 deaths a year, we would only have 400.
Some of the technology behind AVs is already working its way into cars, piece by piece. (See "5 safety features that do what drivers used to.")
Adaptive cruise control systems vary a car's speed to match traffic. Blind-spot monitors alert drivers to hidden traffic. Vibrating seats awake drivers who drift across lanes. But automakers are working to bring together technologies that can handle more of the decision-making of driving.
Audi and Mercedes recently demonstrated Traffic Jam Assist, which combines automatic steering and adaptive cruise control, allowing the car to control itself up to 37 mph. Cadillac is working on Super Cruise, a semi-autonomous technology that lets the car handle the steering, acceleration and braking in many situations.
Almost all automakers, in fact, are working on a semiautonomous or fully autonomous vehicle. Audi sent one up Pikes Peak in Colorado, and Google has logged more than 200,000 miles in its fleet of driverless Toyota Priuses on highways, city roads and winding mountain roads.
4 keys to nearly accident-free roads
What happens when computer-driven cars help to drop accident rates almost 90 percent? Insurance premiums plunge, according to analyst Donald Light at Celent.
In a recently released report, Light presents a scenario that predicts that by 2022, auto liability premiums will drop 60 percent to 80 percent from 2012 levels. The decline would be gradual, with liability premiums dropping 20 percent by 2017 and collision and comprehensive premiums going down 30 percent. The savings would accelerate after 2018 as collision avoidance and automated traffic enforcement became more commonplace.
That savings scenario hinges on the growth of four technologies that already exist in some form:
- Telemetrics, currently used by insurers -- such as Progressive's Snapshot -- to help determine pricing. In the future, these devices may provide real-time driving information and feedback to help make drivers aware of dangerous habits.
- Collision-avoidance systems, such as brake assist and lane-departure warnings.
- Automated traffic enforcement, such as red-light cameras and speed cameras.
- Autonomous vehicles, foreseen in the Celent report as becoming dominant in 2023. However, it could be much sooner that we see them on the road.
But don't take off your driving gloves just yet.
Who is responsible for driverless cars?
AVs are currently legal only in Nevada, which requires a human in the driver's seat. . (See "Robot cars: You can text, but you can't drink.") California, Florida, Arizona, Hawaii and Oklahoma are considering the matter. But once lawmakers allow driverless cars on roads, liability almost certainly becomes the focus.
If your car fails to detect a slower speed limit, who gets the speeding ticket? Will a computer respond to flashing lights and a siren? What if your car is hacked or you download a virus?
And the biggest liability question of all: Who is responsible if an AV crashes -- the owner, the auto manufacturer or the software maker?
Some experts feel the liability that currently rests with drivers could shift back to the manufacturer.
"The primary legal issue is the shifting of more legal responsibility from the driver to the car manufacturer, seller and servicer," says torts attorney Thomas J. Simeone of Simeone & Miller in Washington, D.C. "Specifically, a driver may be able to argue that a collision was due to the car not doing what it should, rather than his or her error. What is interesting is that the driver of the car will become a witness and will have an incentive to testify against the manufacturer -- to shift legal responsibility away from himself."
Others doubt that automakers would be willing to take on that added liability, and say instead that drivers themselves could be liable for poor maintenance or failure to download the latest software patch.
Possible solutions include adding insurance costs to the car, or simply staying with the current system: letting insurers pay the claim, then pursuing automakers in court over manufacturer defects.
That might be easier all around. "If there is any chance of [law]suits," says professor Robert W. Peterson of Santa Clara University in California, car owners will want insurance of their own. "Auto manufacturers that do not have a network of insurance adjusters may be ill-suited to deal with the daily grist of auto accidents."