In today’s day and age it seems like everyone is constantly on the move. Life is moving at a much faster pace so people are demanding more ways for things to be done quicker and more conveniently. To solve that problem, technology is rapidly evolving and focusing more and more on convenience. For example, it is estimated that within the next 5 years, self-driving cars will become more prevalent on the roads than manual ones. Even now apps like Uber and Lyft are making it more convenient for people to travel where they need to get to next. What does all of this rapid growth in technology mean for insurance companies? They, of course, need to evolve as well.
More Car Accidents
With everything moving at a faster pace, there will likely be more car accidents. In 2016, there were more than 40,000 auto accidents resulting in fatalities. This was the highest recorded amount of auto accidents within a decade. This could be in direct correlation to people being more distracted than ever through such things as cell phones. Auto accidents make up roughly 50% of personal injury claims, which is great business for personal injury firms. However, people obviously would like to be as safe as possible and want to lower that percentage.
What does this mean for the future of automobiles and insurance? It is expected that by 2025, insurance premiums will drop more than $25 billion as a result of more driverless vehicles. Although cars are still on the lower end of autonomy, the possibility of driverless cars is not that far away. On the National Highway Traffic Safety Administration’s 1-5 scale, Tesla is considered a level 2. This means a driver should still be fully engaged in the operation of the vehicle while it is in motion. It’s expected that by 2035, 23 million vehicles on the road will be a level 4 vehicle, meaning that the vehicle will be mostly self reliant upon itself and the driver will not have to worry about being fully engaged while driving. Jamison Narbaitz, senior counsel with Clyde & Co. states, “These changes have interesting implications for insurance because as there’s fewer human drivers there will be less of a need for personal auto insurance as we know it… As there’s more fleet ownership of vehicles, there will also be less of a need for personal auto and there will be more of a focus on products liability-type coverages.”
Insurance companies such as State Farm and Progressive are monitoring their clients more than ever before. Each company has an app that will track the drivers actions, as long as given consent. Both companies promote that the safer someone drives, the more money they can save on their insurance. Giving quite the incentive to their clients to drive as safe as possible to not only keep the roads safe, but to lower their insurance premiums as well. Will this lower the number of personal injury claims? Only time will tell.