The driver-less car that may have once been a fantasy is now becoming a reality. Insurance companies are feeling the pressure as experts estimate that the rise of self-driving technology will bring accident rates down by up to fifty percent. In turn, slashing car insurance premiums by up to sixty percent. There are a number of questions that remain unanswered. Will software companies need insurance policies to cover potential hacks?
The auto insurance industry is having its Napster moment. Like record companies at the dawn of online music file sharing, Allstate, Geico, State Farm, and others are grappling with innovations that could put a huge dent in their revenue. As carmakers automate more aspects of driving, accidents will likely plunge and car owners will need less coverage. Premiums consumers pay could drop as much as 60 percent in 15 years as self-driving cars hit the roads, says Donald Light, head of the North America property and casualty practice for Celent, a research firm. His message for insurers: “You have to be prepared to see that part of your business shrink, probably considerably.”