Driverless lorries and cars will be trialled in the UK, the Chancellor has confirmed in its Budget earlier this week.
I spoke to Alan Walker, Senior Vice President, Global Lead - Digital Insurance, Capgemini Consulting, to find out what this might mean for insurers.
“The announcement that driverless cars will be trialled on UK roads by 2017 is a major statement from the government that it is backing digital technologies to drive our economy forward,” said Alan. “There has been a lot of talk about safety, particularly following the Google car crash last week, but driverless cars will in fact slash the level of risk on our roads. They are already proven to be safer than humans so, not only will there be fewer drivers to insure, but accident rates be diminished.
“Most of the risk, and therefore most of the premium, will relate to the ability of the autonomous car to operate as advertised. It will be a product liability risk for the car manufacturer to cover, rather than a risk for the driver to insure. And with minimal product errors, the car manufacturers may well decide to keep that risk on their own balance sheets, rather than outsource it to insurers.
“This Budget announcement suggests that fully driverless lorries and cars will become the norm in the coming years, and this will transform the motor insurance industry. The risks from cars, and the ability of insurers to make money from them, will both reduce drastically. So while UK citizens will benefit, insurers will suffer as their sources of premium decline.”