Driverless cars are set to take the wheel in most instances by 2035, a new report from consulting firm IHS Automotive revealed this week. According to the report, the US can expect 11.8mn driverless cars on the road in the next 20 years.
By 2050, IHS predicts, nearly all private and commercial vehicles will be self-driving cars.
All of this leaves limited time for the insurance industry to sort through some complicated liability and rating questions, says Robert Peterson, director of the Center for Insurance Law and Regulation at Santa Clara University.
“When, if ever, will a faultless driver be ‘legally responsible’ for an accident or be ‘legally entitled’ to recover from a faultless, uninsured motorist?” Peterson asked. “If [the primary responsibility] is on the operator, will it be passed to the manufacturer? How will all of this impact premiums for insurers?”
Peterson is also interested in the clash between state law in California—the largest insurance market in the US—and the practicalities of self-driving cars.
“California operates its private automobile insurance market under Proposition 103. This law imposes some mandatory rating factors, such as driving record and the “good driver discount” that make little sense when the cars drive themselves,” Peterson told Insurance Business
. “Also, it is awkward to adjust rates as risks rapidly change with improvements to programming, mapping, etc.”
These and other complications will make it difficult for insurers to adequately base auto rates when the cars are initially introduced. By IHS’s 2035 timeline, however, Peterson expects the matters will be resolved.
“I would expect that be 2030, there should be sufficient experience on which to base rates either for personal automobile insurance for drivers or commercial insurance
for manufacturers,” he said. “The interim, however, may present some challenges.”