Self-Driving Cars Could Bring Big Changes to Insurance

By Tamara Flinn July 31, 2017

Just last month, another automaker announced a 2025 goal to develop cars that drive themselves on city streets; and the company reaffirmed that cars capable of driving unassisted on highways will roll off its assembly lines by 2020.[1] The competition in vehicle automation is heating up, though most insurers feel “unprepared” for the changes this will bring to the market.[2] Because it’s more important than ever to get ready, we’re monitoring the standout possibilities for fundamental changes that new vehicle technologies may bring to auto insurance.

Autonomous Driving Features Are Likely to Improve Vehicle Safety

The most obvious changes to expect from new automotive technologies are significantly fewer accidents and a corresponding decrease in accident and auto bodily injury claims. Human error causes at least 90 percent of auto accidents,[3] and that’s why vehicles with advanced collision prevention systems will help reduce accident frequency—as much as 80 percent by 2040.[4] Cars with autonomous driving features are expensive to repair and replace, but we’re expecting they will spark a net reduction in industry loss costs.

The advantages of automated features won’t be limited to new vehicles. Older cars will be retrofitted with collision prevention systems that alert the human driver and advanced artificial intelligence (AI) that steers, brakes, and accelerates without human intervention. As such technologies mature, we expect greater consumer adoption.

Manufacturer Liabilities May Prompt a Change in the Insurance Business Model

When self-driving cars become vehicles of choice, there could be a fundamental change in the balance of market risks and exposures. Most insurers now protect customers from human driver error. In the future, companies may shift their focus to helping manufacturers limit their risks from technical failures[5] that may be inevitable, even with the best self-driving cars.

Carmakers and original equipment manufacturers (OEMs) gain greater exposure to liability losses when larger numbers of individuals rely on greater levels of vehicle automation. So whether the consumer of the future owns a vehicle or takes advantage of new options that emerge, product liability is likely to play a large role in insurance.

For information about the ways ISO Claims Partners’ Liability Navigator™ can help you manage claims today and into the future, please contact Tamara Flinn at Tamara.Flinn@verisk.com.


[1] Reuters. “Honda to focus on self-driving cars, robotics, EVs through 2030” (June 8, 2017) http://www.reuters.com/article/us-honda-strategy-idUSKBN18Z0KL

[2] Hanover Research. “Merging Trends in Automobile Injury Claims.” 2016.

[3] National Highways Safety Administration. “Automated Vehicles: Overview” https://www.nhtsa.gov/technology-innovation/automated-vehicles

[4] Hanover Research, Op cit.

[5] Ibid.


Tamara Flinn

Tamara Flinn is the director of product management for ISO Claims Partners. She oversees Liability Navigator as well as product development, new customer implementations, and product and customer support. Tamara has more than 15 years in personal auto liability claims and management and 5 years in consulting. She works in the Columbia, South Carolina, office.