Dave Gershgorn | Quartz | April 3, 2017 | 0 Comments

Self-Driving Cars Will Be Much Safer But a Nightmare to Insure

Show attendees sit in the Chrysler Portal self-driving concept car at CES International Thursday, Jan. 5, 2017, in Las Vegas. Jae C. Hong/AP

Nearly every automaker is rushing to cram autonomous features into their cars: self parking, adaptive cruise control, and lane-keeping assist all take control of the vehicle from the driver, acting as baby steps toward full autonomy.

But the technology that enables this semi-autonomy is expensive, shooting insurance rates through the roof, according to a report from the Wall Street Journal, even as it promises to greatly reduce accident rates over the long term. The debate on who will eventually pay that higher cost—customers, automakers or ride-sharing companies—continues, but for now the consumer still shoulders the burden.

Take a side-view mirror from a car that straddles the border between autonomy and human-controlled, the Lexus RX 350. The car can come loaded with parking assist, automatic braking, and blind-spot detection, and Alphabet’s Waymo uses a similar car, the RX 450h, in its self-driving tests, which can use the same mirror. For consumers, a “regular” side view mirror replacement would cost $390, while one with cameras for collision avoidance would cost $840, according to the WSJ. With more on the line in the event of an accident, premiums are likely to reflect the risk.

To add to the expenses, a car that’s been in an accident might incur additional costs for the recalibration of its on-board sensors.

“Cameras and lasers may need to be aimed to be sure the vehicle is detecting as it should,” writes Mitch Becker, technical instructor for ABRA Auto Body and Glass. “Auto glass companies are struggling with this now because no longer is it just a windshield replacement. It’s a front lens of a camera replacement.”

Becker continues that after an accident all sensors would have to be re-calibrated, something the average repair shop or even dealership might not know how to do.

Beyond repair costs after an accident, famed investor Warren Buffett sees insurance companies taking a financial hit when autonomous features begin to cut accidents on the road.

“If the day comes that a significant portion of the cars on the road are autonomous, it will hurt Geico’s business very significantly,” Buffett told CNBC. “If they’re safer, there’s less in the way of insurance costs, that brings down premium buy significantly.”

In the future, automakers may become increasingly liable for the decisions their software makes, rather than being able to blame driver error when an accident occurs. This will fundamentally change how the auto insurance industry works.

“At least the current thinking is that the manufacturers will be ultimately responsible for a lot of these future accidents when an automated vehicle is involved,” an actuary for the Casualty Actuarial Society, Rick Gorvett, told NPR.

But as with most predictions when it comes to self-driving cars, there isn’t enough data or precedent to reach any real conclusions.

Even Buffett tip-toes around making concrete predictions.

“If I had to take the over and under 10 years from now on whether 10 percent of the cars on the road would be self-driving, I would take the under, but I could very easily be wrong,” Buffett said.

Comments
JOIN THE DISCUSSION

Thank you for subscribing to newsletters from Nextgov.com.
We think these reports might interest you:

  • Modernizing IT for Mission Success

    Surveying Federal and Defense Leaders on Priorities and Challenges at the Tactical Edge

    Download
  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

    Download
  • Effective Ransomware Response

    This whitepaper provides an overview and understanding of ransomware and how to successfully combat it.

    Download
  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

    Download
  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

    Download

When you download a report, your information may be shared with the underwriters of that document.