The launch of a driverless vehicle has so far proven a success, with the vehicles having clocked up 200 000 kilometres in the US. While it may be some time before the technology reaches South Africa, it is likely to have far-reaching consequences for the insurance industry, if it does become commercialised.
According to Warwick Scott-Rodger, marketing manager at MUA Insurance Acceptances, experts believe that due to the system's accuracy, driverless vehicles could help reduce the number of fatalities that occur on the roads daily. "The extent of motor vehicle accidents remains a serious problem in South Africa and is most often the result of human error. Consequently, a driverless system could help to eradicate careless and negligent driving behaviour, thereby reducing the number of accidents. If this is the case, and fewer accidents occur, then the cars could also be built lighter, allowing for less fuel consumption."
Industry will become more competitive
Scott-Rodger says if the risks posed by driverless vehicles do prove to be less than those posed by traditional vehicles, the insurance premium charged should also reduce. "In theory, this would make the industry even more competitive, forcing insurance companies to include additional value added services to make their respective offerings more attractive. However, while the traditional risks posed by driver vehicles may be substantially mitigated, the reality is that it will take a long time for cars to be introduced with the new driverless system and to be able to drive the streets with absolute autonomy.
"Compatibility of all vehicles to enable constant cross communication with each other is the crux here as otherwise the sizeable benefits offered by such a system would soon to be obsolete. As a result, a major concern for any insurance company that opts to provide a reduced premium in response to the driverless system being implemented is that a sluggish take up of this technology would mean that the risks posed by other drivers on the roads would remain as rife as before."
Adjustments to insurance contracts
Scott-Rodger says even with a high take-up of driverless vehicles, the introduction of such technology would mean insurance contracts would certainly have to be revisited. "With an insurance policy being a contract between the insurer and the insured, certain terms and conditions may need to be tweaked in order to ensure that comprehensive cover is not compromised."
Exclusions such as driving under the influence of alcohol may no longer need to be applied. However, one of the most contentious legal issues may be that of third party claims. Scott-Rodger says the introduction of this new mode of transport would also require transport laws to be revised. "This will include legislation regarding speaking on the cell phone whilst driving, licensing of vehicles and drivers, as well as the possible impact on claims submitted against the Road Accident Fund."
"The principle behind driverless technology is very positive and so far the technology appears to be proving a success. However, the phasing in of this type of technology will take a long time, especially in emerging markets where older cars remain on the roads for far longer," concludes Scott-Rodger.
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I think the issue concerning revisiting the insurance policies has already been anticipated. Obviously it has to be tweaked a little since driverless cars do not involve humans, thus lowering the coverage needs. This change would definitely be greatly awaited by the owners of cars in the more expensive category like BMW, Jaguar and others who are currently paying higher policy charges because of their bigger car capacity.
There is always pros and cons when new systems are being implemented. In this scenario, a driverless car is a definite advantage to mankind in general in the sense that it helps mitigate accidents caused by human error, it transports human from one place to another without the need of a license and many more. It also contributes to the green efforts by lowering fuel consumption since the car will be driven at a constant speed. The catch is -- insurance policies will bear less coverage and insurance companies will stand to lose out due to this innovation.
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