In order to understand the growth of driverless cars, and why there needs to be product creation and thought leadership around it, we need to answer the big question. How will insurance agencies begin figuring out pricing models for new insurance products, or even existing ones? After all, if every car is automated human error will dramatically decrease. Which means fewer car accidents. Which means fewer premium increases.
Let’s take a step back
What are the varying degrees of autonomous vehicles? Most people think that this only applies to self-driving cars, but manufacturers have slowly added more automated features to their vehicles since their inception.
In this diagram from Business Insider you can see the levels of automation starting with the first vehicle all the way to an imagined level 5 — completely automated vehicle without human interaction. That’s where the trouble comes in for auto insurance premiums. If the fully automated cars become widely adopted, the premiums will have to decrease. With no one behind the wheel, who could be at fault? The issue becomes that of the manufacturer, not the individual driver.
Ever increasing Auto Insurance Premiums
Pretty much every year insurance premiums go up. That’s because year-over-year there is also a rise in auto-related fatalities and crashes. The extreme costs tied to these affect everyone who pays them, and according to Progressive, this increase has raised the cost per claim by 5 percent. Which means, as autonomous cars become increasingly safer, insurance agencies won’t be able to rely on auto accidents as a way to drive revenue. They’ll need to find an alternate product.
Fully autonomous cars going forward
It’s speculated that by 2035 there will be 12 million fully autonomous units sold a year, globally. And while that may seem pretty far off, now is the time for insurance agencies to start talking about different products and how they will adapt to the drastically changing future market.
But what about in the short term? While consumers may not have their very own autonomous car, there are still fleets of them for companies like Uber and Waymo. That’s why in the short term, insurance agencies should prioritize the creation of insurance plans for these ride-hailing businesses.
How can Tallwave help?
The burning question. We gave you all the stuff to look out for, but what exactly can you do about it? You know you need to start diving into research and development of new insurance products to adapt to the market shift. In fact—every insurance company knows that. Which is why there is so much opportunity for strategic partnership.
Enter Tallwave’s content and organic search strategies. While tons of people are looking up keywords related to automated driving, no one is checking out the ones geared toward insurance companies. That means, strike while the iron is hot and become the thought leader on driverless cars in the insurance industry. Letting current customers know you’re ready for the change ensures they won’t seek out your competitor when the time comes.
If you’re ready to start a conversation and get ahead, Tallwave is ready to be your partner.
Written by Jessica Lizza