Digital image of transparent car

Autonomous cars & accidents: The human and financial standpoint

In our previous posts, we saw how autonomous cars will transform every aspect of our lives. Cities will change the way they function and develop, travelling will become safe and efficient and car manufacturers will have to look for newer methods to survive the competition. One major issue with these autonomous cars is the fear of being driven around by a machine. Will they allow for human intervention when it comes to avoiding accidents or will they autonomously ‘decide’ who survives and who doesn’t? The thought might seem obscure but the concerns are definitely there. Another point to consider is how this radical change in global modus operandi – the implementation of driverless cars – is going to impact the insurance industry. How will road safety and car insurance be affected by and deal with autonomous driving and its consequences?

Video credits: TED

To get an understanding of this we will need to make some predictions regarding the expected developments in the next decade and see to what extent self-driving cars will bring about changes across global businesses and governments. This past year we have seen numerous developments from tech giants like Google as well as car manufacturers like Audi, Mercedes, BMW and Nissan. Check out our previous post to find out more about these developments. Services like Zipcar, BlaBlaCar, Uber and Lyft are already forcing authorities to bend regulations to get their operational models on the road. It’s imperative that by 2016/2017 companies like Google and developing countries like China communicate about particulars around programs and large scale developments in the field of autonomous vehicles which will significantly impact renewable resources, space exploration and global emissions, among others. Fully self driving technology is not expected to cost less than $10,000 per car until 2025.

By the beginning of 2018, debates over job cuts and security threats will be finalised, possible hurdles will be eliminated and major countries and groups like the EU will launch redefined regulations for autonomous vehicles. Soon we will see fleets of autonomous trucks, rental cars and shared vehicle schemes. By 2020, autonomous driving will be fully operational and regulations will be in place across the globe. Car manufacturers will have to start customising their vehicles to implement self-driving technology. By 2030, car ownership will decline substantially. People will increasingly opt for more autonomous, shared schemes and driverless cars will set a new benchmark for urban cities and smart societies.

Colourful image of blue self-driving car

But how safe will this development be?

Coming back to the first pressing concern, what about the safety of the passenger of the self-driving car? What authorities will these robot cars have when it comes to taking action in the event of an impending accident? Who will delegate this authority? Will it be the creators like Google or the driving and traffic authorities? These questions need to be asked order to realise the full scope of self-driving vehicles and our own safety. There are some initiatives. Let’s take a look.

Google’s ‘Defensive Driving’ Lessons

Did you know that the Google car will drive closer to the vehicles in front of them than recommended in the Highway Code? The reason for this is that it will allow the car to avoid other motorists from cutting dangerously ahead of them. Traditionally, these regulations around distance have been in place so that humans have ample time to react in case of fatalities but with an android inside, precision time will be exceedingly higher. The tests regarding the application of such codes are being conducted by Google in Mountain View California, where converted Lexus hybrid cars are deployed and used with radar, video camera and rooftop lasers to scan and map the environment. To date, Google cars have not violated traffic norms and there has been only one major accident where a human took over driving controls. There is also a website listing the particulars of possible accidents and precautions as well as FAQs regarding autonomous driving. However, Google has stated that, in order to comply with privacy regulations, not all accident data will be released.

Robo-ethics: how will life and death decisions be made?

The ethical issues around autonomous driving involve numerous questions and even fewer answers. These cars are set to become the first generation of social robots roaming freely about the city. What will their reaction be in the case of an impending accident or a car crash? Accidents might reduce greatly in number but they won’t be eradicated completely. There may be a situation where your car is about to hit a bus and it has to make a decision between saving you or the children inside the other vehicle. I believe the right way is to move ahead with a staunch principle that machines cannot make life and death decisions for humans. I think there should always be a human involved and there are some examples towards this endeavour. For instance, Toyota is finding ways for an autonomous car to quickly delegate driving controls to a human driver, just in case. I don’t think that is a comprehensive enough solution, though.

New UK Driving Standards want autonomous cars to keep records of crash data and more

Apart from recording devices, the new UK Driving Standards also require autonomous cars to be equipped with computer firewalls to prevent hacks and protect the passengers while in transit. The government is worried about the fact that with the advent of autonomous cars, companies might indulge in data manipulation and collect personal data for their own benefits or, even worse, hackers may take remote control of these cars. Therefore, stringent compliance regulations must be in place to protect people in general. After an accident, the organisations in charge of this data will have to provide the investigators with this information in order to ensure fair insurance claims and personal security. Insurance firm AXA thinks that the guarantees around data protection and security will encourage consumers to accept autonomous cars.

Who is ultimately responsible for your safety? Is it you or the driverless car?

At this point in time there is no concrete opinion on the matter but I believe that as time goes by and car manufacturers come up with comprehensive security solutions for autonomous cars, the answer to this question will be clearer. One solution is to develop methods to transfer controls between the car and the human driver but there has to be a guarantee that emergency situations will not require such transitions. According to experts, 90% of car crashes are undeniably caused by human error. Therefore, the major focus of the car manufacturers is to develop methods and technology which monitor car surroundings, warn the driver in case of emergencies and even take control in such circumstances.

Advanced safety features have consistently been in development over the past two decades and there are existing measures which can be modified and implemented in self-driving cars to make them more secure. The Forward-collision Warning (FCW) System for instance, uses sensors and cameras to monitor the distance between your car and the vehicle in front of you. It sends you audible and visual warnings. This system is a benchmark in many luxury cars like Chevrolet Traverse, Ford Edge and Honda Accord. Other examples are blind spot monitoring systems which monitor the areas adjacent to and behind your car, cross-traffic alert systems which alert you when a car is behind you, Lane-departure Warning Systems (LDWs) which prevent sleepy or distracted drivers from accidentally changing lanes, Adaptive Cruise Control Systems, pedestrian detection systems, self-parking and more. In our previous posts we saw how self-parking technologies like the one Bosch is currently working on (Valeo) might well bring an end to parking troubles.

Man inside car folding hands

Future developments are centred around vehicle to vehicle communication which will drastically reduce the probability of error

Imagine two robot cars talking to each other from a long distance. They would instantly know whether they are headed for a collision or any other fatality. The idea may seem far-fetched but with cloud technologies getting cheaper by the day, this may well become reality in the future. Once vehicles are able to communicate with each other, the seemingly perfect level of efficiency may eradicate car accidents once and for all! While the technology may seem plausible, there is a significant financial risk associated with launch and implementation.

Google cars have been involved only in 14 accidents in their six years of testing across two million miles, of which some were caused by other vehicles. Statistics show that self-driving cars are a lot safer than human-driven cars and this is the biggest motivating factor according to experts. Back in the day when Ford launched the model-T, he had to convince people that cars would offer better living standards. Similarly, car manufacturers today will have to develop concrete hardware and software and make people believe in the inherent safety and security of these autonomous cars. Do you think that this advanced tech will be able to beat the perception of the human eye and brain? I think only time will tell!

Car insurance companies will have to change gear or robot cars will put them out of business

Automobile insurance is a lucrative business. Today, car insurance premiums are one the most common source of revenue for insurance companies around the globe. With the disruption led by autonomous cars, shared services and more, insurance companies might have to rethink their entire business models. As we saw above, by 2030, car ownership may reach a record low, leaving many car manufacturers who haven’t adapted facing bankruptcy. Insurance companies will face a similar fate as concepts like personal car insurance become extinct. Liability exists where humans are in charge – where does it go when cars take over? If autonomous cars are in control, given that at no point in transit has the control been transferred to a human, then the liability should most probably rest with the vehicle or the manufacturer. There is also scope for variations in liability as it depends on the sharing dynamics between the autonomous vehicle and the human driver.

With shared services this liability becomes a greater risk for manufacturers

It’s a simple inference really. According to the picture we just painted, shared services and driving schemes will rule the scene with autonomous vehicles in the future. This reduced ownership will not allow Insurance companies to liquidate the entire sum of their liabilities. Accidents will likely be at an all-time low and, as a result, people will need the lowest covers possible. Experts say that there could be a 60% drop in car insurance premiums by 2030.

Since its inception, insurance has been a lucrative business. Last year, $195 billion was received in premiums by drivers in the US alone. In fact, it is such a booming business that companies like Geico spend $1 billion a year on advertisements that pitch policies to potential new customers. With such benefits becoming non-existent in the future, insurance companies will need to rethink their vehicle insurance strategies. For instance, Allstate is researching new opportunities in a study called ‘connected car’ where new sources of revenue are being researched. Ideas like mobile phone insurance are coming to the surface. Newer, complex models will surface as Insurers also use the IoT to know more about their customers. For instance Allstate’s device which tracks driving behaviour might send you a coupon when you are driving past a restaurant.

However, there is an underlying opportunity in the business to business section of this segment. Insurers could develop policies to sell to autonomous car manufacturers. No technology can ever be 100% perfect. So, while accidents will be greatly reduced, there can be other anomalies. In such cases, the liabilities for companies like Google will be huge and therefore the opportunity to cover these liabilities will be significant as well. Also, Cyber coverage could offer a new life to car insurers. There will be an inherent cyber threat to autonomous cars as they sync with the cloud and start communicating. The possibilities of hacks and online attacks will allow insurers to cover associated risks for individuals and companies.

However, experts do point out that while the newer opportunities may run full scale in the future, the fact that they will never be able to offer revenues higher than what traditional car insurance provides today is real. In a nutshell, the profit made through new opportunities will never cover the money lost here. But this is unavoidable, isn’t it. Throughout human history, tried and trusted practices and policies have often been disrupted to accommodate and implement new and improved ones. Today, a substantial part of household incomes across the world goes into automobile insurance and maintenance. With the advent of autonomous cars and related services, these costs can be greatly reduced. The savings which reduced premiums and shared schemes will provide will become huge motivators for the acceptance of autonomous cars. As for insurance companies, they will have to look into newer revenue models and accept the fact that, in the era of self-driving cars, personal vehicle insurance will become obsolete.


The internet of Things will make the world a more connected place. Autonomous driving offers the potential to transform cities into sustainable, safe and smart ecosystems where humans can afford a better standard of living as a result of reduced living costs. Concepts like shared commuting, car-pooling and even shared ownership will become popular when the controls shift from human to autonomous cars. In this era, safety and security will be guaranteed as cars communicate with each other to chalk out the safest routes, speeds and directions to take you from one place to another without any accidents and delays! A comprehensive recording system will allow investigators to conduct fair procedures in case of fatalities.

Although the benefits associated with these new developments are substantial, the risk of increased liability that manufacturers and insurance companies may face will coerce them into launching new B2B packages and policies to cover these risks. Personal automobile insurance will become redundant and new policies involving integral devices like smartphones will spring up. As the costs of these premiums go down, insurers will be forced to venture into new, complex revenue models. So, do you expect your car insurance to gift you restaurant coupons while you are driving home from work? Wouldn’t it be great to know that your robot car only takes driving routes where you are completely safe?

The details might not be concrete yet but the timeline is clear. In spite of the risks involved, the motivational factors for acceptance of autonomous cars are great. Soon, automated school buses will be in charge of taking our kids to school and bringing them back home safely. Are you ready for it?

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