With new technology available to help drivers avoid crashes, can driving become so safe that auto insurance no longer will be necessary?
Robotic cars, collision warning systems and other types of technology should lower the number of car accidents in the United States, although auto insurance likely still will be needed in some form, according to a scenario outlined in a new report. Auto liability insurance premiums -- for bodily injury and property damage -- also likely would drop in this scenario.
A recent report from consulting and research firm Celent analyzes four types of "preventive" auto technologies expected to lower crash rates over the next 10 years: telematics (devices that report driving habits directly to your insurer), collision avoidance (such as lane-departure warning systems and other accessories built into vehicles), automated traffic law enforcement (red-light cameras) and robotic cars (driverless vehicles).
Technology in use
Telematics data is used for a form of auto insurance known as "pay as you drive." GPS and other devices track a driver’s speed, braking and acceleration rates. Safer drivers are rewarded with lower insurance premiums.
Around the world, more than 2 million motorists have signed up for pay-as-you-drive programs. That number is expected to grow to 100 million by the end of the decade, according to a study by Ptolemus Consulting Group.
Labs at Google are testing robotic cars, which are now on the road but haven't been sold to the public. Nevada recently approved driverless vehicles for the state's roadways, although it’s unclear how much these cars will cost to insure, says Michael Barry, a spokesman for the nonprofit Insurance Information Institute.
Coverage in the future
Vehicle owners still will need auto insurance in the future, the Celent report finds, but by 2022 their premiums could drop by 60 percent to 80 percent from where they are today.
Nonetheless, Celent points out that the future drivers still will speed, cars still will have mechanical failures, some roads still will be poorly designed, drivers still will be distracted and human error still will be a factor. All of those can contribute to higher premiums.
Barry says Celent is “getting a little bit ahead of themselves” with the report, as it makes projections based on technologies that haven’t been widely adopted yet. Furthermore, Dick Luedke, a spokesman for State Farm, notes that “auto insurance protects you against more than just crashes,” such as theft, vandalism and hailstorms.