A variety of pieces for you this weekend:

A Reuters article giving an overview of autonomous vehicles. Article predicts driverless cars “in our lifetime”.

Meanwhile there is an anti-self driving car piece over at caranddriver.com, see Part 1 and Part 2.

It appears there may be another firm working on driverless technology this article notes that French car parts maker Valeo has joined the race with a driverless Volvo.

Also IEEE Spectrum has a short interview up with one of Volkswagon’s R&D bosses on safety, electronics, road trains and mapping in autonomous vehicles.

Happy reading!

Bryant Walker Smyth has a post up about a hypothetical collision between a self-driving and a driven car.

The scenario is quite interesting and involves an illegally parked self-driving car with outdated software being hit by a human driven car. Its an interesting hypothetical, if you’d like to contribute please head to Bryant’s blog and leave a comment.

Well, it finally looks like I’m not the only one.

For the last few months Anthony and I have cut lonely figures with our incessant, courageous, valient and – may I even say, heroic – death-riding of the car insurance industry. (Examples here, here and here.)

In short, we believe that the massively increased safety of Driverless Cars will cause a collapse in car insurance premiums. Not only that, we believe that most driverless cars will be owned by taxi companies or car share companies and that the actual pool of owners is going to be hugely reduced. Based on these two predictions, the car insurance industry will be on pretty shaky footing. It’s our strong belief that in 20 years the car insurance industry will be a mere rump of what it is today.

I hope Berkshire Hathaway understands this, because without car insurance they matter a lot less. (Maybe THAT is why Warren Buffett dislikes them so much?)

We have finally found company to share our gloomy, post-apocalyptic worldview: Robert Light, from a consulting company called Celent, in his report “A Scenario: The End of Auto Insurance — What Happens When There Are (Almost) No Accidents.

As reported by InsuranceJournal.com;

It describes a provocative, but plausible, scenario for the not distant future of the US property/casualty market, and explores that scenario’s implications.

“In that scenario, technology is widely deployed that radically reduces the frequency and severity of motor vehicle accidents. Consequently, the need for automobile insurance is substantially reduced — and insurers see a large reduction in their revenue as automobile insurance premiums drop.”

Private passenger and commercial auto premiums accounted for 39 percent of the total premium for U.S. property/casualty insurers in 2011, according to the report.

In the scenario proposed by Celent — and the authors make it clear that it is only a scenario that could or could not happen — the auto insurance portion of total P/C premium over the next decade would drop from 39 percent to just 13 percent.

It’s fair to say that at Driverless Car HQ  we have been engaged in a lot of speculation about the issue of driverless car insurance.

Des Moines Register today takes a look at the current state of play. The basic summary is : not much is happening, and insurance companies just don’t get it.

Figuring out how to insure these vehicles will be a key hurdle for the people who’d like to see more of them on the roads, but the insurance industry, including several companies in Des Moines, has little to say on the matter.

We found this quote particularly interesting:

“The reliability of the technology has to be 100 percent,” said Bill Windsor, a vice president in the Office of Consumer Safety at Nationwide Insurance, which has major operations in Des Moines. “It’s not acceptable to have one error, because that could mean somebody’s life, so I think they have a long way to go before they can prove that the reliability is at that point.”

Bill may be correct from a public perception standpoint but he forgets that if Driverless Cars are to be error free, he can pretty much say goodbye to his job. Driverless Car insurance will, in the end, be mostly limited to fleet sales and will be comprised of public liability insurance, and act of God insurance (ie. floods, major hailstorms etc). The reason we believe this to be the case is that Driverless Cars are likely to be owned by fleets. Fleets will not need insurance for events that can happen to just the one car as this will be in no way economical. The only protection the fleets will need is against major events that could damage a good portion of the fleet at once, major lawsuits and other things of that nature.

Some insurance types have thought it through, though. Check out this quote from Trent Middendorf of Middendorf Insurance, a brokerage with offices in metro Des Moines:

“If it did improve safety, and there were fewer accidents, I could see auto liability rates going down.”

New Scientist’s latest issue will have a story on driverless cars. There is not much new in the article that hasn’t already been published many time elsewhere, however, there was a small paragraph at the end that I found interesting:

If the going’s tough, the car gets cover

Driverless cars could reduce insurance costs, says Paul Newman of the University of Oxford, by allowing the car to add to its own insurance as road conditions change.

“On a dark icy night, when it is riskier to drive, the car could go online and bid for extra insurance cover until conditions change,” he says. “If that proves too expensive, because conditions are tough for the autonomous system, the owner could take the wheel.”

I guess the point here is that driverless cars are going to be more than just cars. Sure they will have core navigation AI but we will probably be able to install applications like on a smart phone so that car can buy insurance, take us to the mechanics or remind us it needs to pick the kids up from school.

Several weeks ago Santa Clara University held a symposium on autonomous cars and their legal implications. We posted about it before but completely missed Brad Templeton’s fantastic summary of the day. Templeton is an enthusiastic blogger on the topic of driverless cars amongst other things and it is well worth checking out and subscribing to his blog.

All cars must have insurance today, and it is normally bought by the car owner/driver, and covers almost all accidents. If a safe robocar is delivered, the lower rate of accidents should mean cheaper insurance. Alas, in California, one of the world’s largest insurance markets and home to robocar labs at Google, Stanford/VW and others, it’s not so simple. California’s Proposition 103 demanded that any insurance policy’s price must be based on weighted factors, and the top 3 weighted factors must be, in order, driving record, number of miles driven and number of years of experience. Other factors like the type of car you have — ie. if you have a robocar — must be weighted lower. So this law makes it very hard to give very cheap insurance for a robocar, and makes it close to impossible to do it for somebody who is getting the robocar precisely because they are a bad driver and have found themselves facing expensive insurance if they keep driving.

Keep Reading

Driverless cars may actually cost more to insure according to Peter Nowak author of Sex, Bombs and Burgers. 

Nowak points out that all the extra electronics will add to the sticker price of the car, the cost of insurance could also go up as replacing those extra parts won’t be cheap if the car is in an accident.

It seems slightly obvious to suggest insurance would be higher on a more expensive car, however when you consider Nowak’s solution, it works:

One intriguing possibility is that the entire notion of car ownership may change. If we can simply order up a car on our smartphone that then drives itself to our front door, what need would we have to actually own one?

At DriverlesscarHQ.com we agree. with this statement. 20 years from now most of us are more likely to own a bicycle than a car. If we do own a car it will be for fun (off-roading or private racing tracks).