In a digital era where a machine can now do the job of a person, and the automation of vehicles in the near future – will motor trade insurance become a thing of the past?
A Driverless Future
Many people will have different opinions about the automation of vehicles, some may think it’s a safer and reliable way to get around, while there will be others that won’t feel safe if they’re not controlling the vehicle themselves.
Those who argue that a driverless car will be safer may in fact have a valid point, as it’s human error that’s accountable for 90% of road accidents. So, by taking away the potential for human error, the future is set to have a substantially lower amount of accidents. Not only will the reduced amount of accidents have an impact on insurance companies, but also it raises the question of who is liable if there is an accident.
Cars have become safer as technology has evolved, but could taking human error out of the equation be the key to keeping our roads safe? Take the potential of human error away will surely not only reduce the amount of accidents, but therefore substantially lower the amount people will be paying out for insurance.
Another thing to consider that in a future with automated vehicles there is likely to be less cars on the roads, with the likelihood of people signing up to car share and transportation services. With less people owning their own vehicles there will be less need for insurance. Again this could prove to be a huge problem for insurance companies.
So what about Insurance Companies?
It’s difficult to keep up with the abundance of new technology being produced all the time. The automation of vehicles is something that you would just see in a film, but now it’s just around the corner – and it’s set to leave a large dent in the revenue of insurance companies.
Motor trade insurance as an industry has become very profitable, and with more companies to choose from than ever before. Many of these companies have now even established themselves as a brand; through the use of marketing campaigns and wellknown characters, such as the Go Compare man or the Compare The Market meerkats.
Vehicle automation could lower the numbers by such a substantial amount that it could leave some of these companies completely obsolete, and those who stay afloat could have some tough years ahead. High premiums from these companies is what makes them so profitable, the reduced accidents and lower premiums will definitely spell trouble for the insurance industry as a whole.
These days you can’t turn on a TV or radio without having to listen to the spiel of the many insurance companies out there. This shows how lucrative insurance has become as an industry. With the high number of accidents on the road each year, it has continually made insurance premiums more expensive for drivers. Automation could be the dawn of a new day, and that day may not have a place for the insurance industry.
Gemma Sheldrick is Head of Strategy DNA Insurance (@dna_insurance), who provide insurance advice and cover for businesses across the UK.