Driverless Car and Aging Drivers
The driverless car is a pivotal technology for those who want to age in place, particularly when that place is suburbia. As people get old and more frail, they should consider giving up the car. Instead, they may continue to drive because there are few other options, particularly in the far-flung suburbs. Just in time for Baby Boomers, may arrive the disruptive technology called the driverless car. It could fill the vacuum in suburbs left open by the lack of public transportation.
The driverless car is mysterious and misunderstood today. People often react with a respectful mistrust of robotics and Artificial Intelligence. But, the automated car is like the cell phone. In the 1990’s most people did not have one, and could not picture a use for it. Today, they cannot imagine how they lived without one.
In an earlier blog we wrote about the technology of the driverless car….the mechanical and engineering hurdles that must be resolved. There remain roadblocks that are as substantive as the engineering. For the driverless car, that roadblock has, and will continue to be, issues of liability and vehicle insurance. Like any car, accidents will happen.
That said, there is good news about safety and accidents. There will be less accidents when cars become automated. It is estimated that 40 percent of fatal crashes involve alcohol, drugs, distraction, or fatigue and an estimated 90 percent of all accidents are due to human error. The driverless car brings another advantage: there will be less traffic jams, and better use of road capacity when cars are automated and communicate with a central traffic server. That said, a certain degree of traffic, and a certain level of accidents, will remain.
The Wall St. Journal (3/5/15) reports that at major insurance agencies are waking up to the “risk factors” from driverless cars and alerting investors. This is an enormous issue for the insurance issue to deal with, since the Journal reports that they collected $175 billion in passenger car auto insurance issues in 2013. For the insurance industry, there is a second type of risk, beyond vehicle crashes: financial risk from an industry sea-change. The driverless car has been mentioned in security filings by Cincinnati Financial Corp., Mercury General, and Travelers Insurance. http://www.wsj.com/articles/will-the-driverless-car-upend-insurance-1425428891
The current assessment seems to be that the driverless car will transform how car insurance is priced. On the one hand, liability may shift towards the manufacturers of the cars. And, while accidents will be less common, driverless cars are more complicated, and will be more expensive to repair, according to the Insurance Information Institute. Of course, all of these estimates are early, “risky”, and preliminary.
There is currently an average 16% turn-over of cars in the US every year. When the driverless car comes to market, it will be permanently change both the insurance industry and trends for car-ownership. For those aging in suburbia, it is a disruptive technology that will bring entirely new possibilities. Aging Boomers are peaking as car-buyers, but they will not be retiring from the future auto markets.