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The spread of self-driving vehicles could have significant insurance implications for automobile manufacturers and suppliers, according to a report released Tuesday by Moody's Investors Service Inc.
In “Self-Driving Cars Could Send Auto Insurers Skidding,” Moody's said that as the technology involved in self-driving vehicles improves, vehicle manufacturers and technology suppliers “could eventually accept liability for collision damage either voluntarily for competitive advantage or involuntarily as courts and/or regulators hold them responsible for accidents caused by their product.”
Moody's said that carmakers could self-insure for most claims and purchase reinsurance to cover “systemic software problems including cyber attacks.” Taking this approach might lead manufacturers to buy automobile insurers as a means of gaining their claim infrastructure and expertise, according to Moody's.
Another approach would be for manufacturers and suppliers to buy product liability insurance, using the insurers to process claims.
Moody's said several decades will pass before self-driving cars are widely adopted, projecting that a majority of cars could be self-driving around 2045, and “are likely to become nearly universal about 2055.” That will have a significant impact on personal lines auto insurers, Moody's said.
As the new technology takes hold, accident frequency will fall sharply over time, and will ultimately mean “significantly lower premiums and, consequently, lower profits for auto insurers,” according to the report.
“Given that personal auto is the largest (property/casualty) insurance line in many countries, including the U.S., the insurance industry impact could be significant,” said Moody's. “Regulators, lawmakers and courts will have to determine how liabilities are shared among insurers, automobile manufacturers and technology companies.”
Even off-the-job motor vehicle accidents are costly to employers, with on- and off-the-job accidents costing organizations $47.4 billion in 2013, according to a Department of Transportation-funded report.