The emergence of self-driving cars and artificial intelligence (AI) has the potential to completely transform the insurance sector. Although driverless cars have many advantages, including a decrease in accidents and an increase in efficiency, they also present new obstacles for insurers to overcome.
A change in liability will be one of the most important effects of driverless automobiles on insurance. Accidents brought on by human mistake are probably going to go down as self-driving cars become more commonplace on the roads. Accidents will instead be brought on by technical issues or software flaws and hacks, which might be the fault of the software developer or the car manufacturer.
Insurance companies will need to modify their policies and premiums to reflect the new risks as a result of this change in liability. For instance, automakers could need to offer their self-driving cars more complete liability coverage – which could eliminate the need for individual drivers to buy regular auto insurance for their own damage. To provide coverage for artificial intelligence (AI)-related risks like cybersecurity breaches or data privacy issues, insurers may also need to collaborate with tech businesses.
While self-driving cars may muddy the waters on liability, they might ultimately make things easier for insurance providers. With the highly sophisticated technology integrated, insurers will now have new and more reliable means of monitoring and recording vehicle activities. This can help eliminate fraudulent claims. Accident claimants will no longer be able to inflate their claims or lie about the cause of an accident, reducing the amount that insurers have to pay out on fraudulent claims and eliminating ‘crash-for-cash’ scams. Even in situations without fraud, sometimes it’s unclear who is at fault for an accident. Monitoring technology in both vehicles can help make assessments without bias (Sikandar, 2023).
Data collection regarding driverless cars will present another difficulty for insurers. Self-driving cars might not be compatible with conventional means of gathering driving data, such as telematics devices or driver monitoring. Instead, in order to assess risk and determine premiums, insurers may need to rely on information gathered by the cars themselves; such as sensor readings or machine-learning algorithms.
The effect that driverless cars and artificial intelligence (AI) will have on the whole insurance industry must be taken into account by insurers. Traditional auto insurance may become less popular if there are fewer accidents brought on by human mistake. Insuring against new risks like cyberattacks or catastrophes brought on by faulty infrastructure, however, may present new opportunities for insurers.
Overall, it’s yet unclear how driverless cars and artificial intelligence (AI) will affect the insurance sector. While there are a lot of potential advantages – like telematics, fewer accidents, less fraudulent claims and greater efficiency, there are also a lot of challenges that insurers will have to overcome. Data-sharing between car manufacturers/owners will be essential for underwriting consideration; data protection issues may have to be looked at thoroughly by regulators.
As technology develops, insurance firms will need to adjust their policies and prices to meet the evolving needs of manufacturers and vehicle owners. By staying ahead of the curve and embracing developing technologies, automakers and insurers can contribute to the current technological trends and provide value to their customers.
The writer is Business Development Manager at Dezag Insurance Brokers Ltd. Contact: 0241076400