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Fully autonomous vehicles occupying New Zealand roads seems like a distant and futuristic concept, but according to one broker, it could be happening far sooner than we think.
Commercial broker Kim Matthews, from Rothbury Insurance Brokers, said driverless cars could become mainstream as early as 2030 and would bring a host of potential changes to current laws, roading, infrastructure and licensing. The potential impact on the insurance sector could also be huge, with one study estimating that the vehicle insurance sector could shrink to 40% of its current size.
“At the moment, there’s only one insured driverless vehicle in New Zealand,” Matthews told Insurance Business. “It’s a shuttle bus that can carry up to 15 people, has no steering wheel and is electrically powered. It’s currently installed at Christchurch airport and is being trialled to see how it works and responds. But there’s a detailed report out in the United States stating that by 2030, 95% of all passenger miles will be done by autonomous vehicles – so actually, that future is not very far away.”
Potential benefits of autonomous vehicles include self-parking, less reliance on fossil fuels and less traffic congestion, along with a significantly reduced risk of road traffic accidents. According to Matthews, there would also be less individual ownership of vehicles, and the public transport system would likely merge with private sector companies such as Uber. These would provide driverless shuttles, which would transport passengers from one place to another as and when needed.
From an insurance perspective, Matthews said the sector is something of a moving target and that there’s still a lot to be considered.
“It’ll be a very new dynamic for insurance advisers,” she said. “The model will change. Instead of providing vehicle insurance for a driver, it will become more about providing insurance for the car; the type of car almost always affects the premiums and there will no longer be the human error element to factor in, so the chance of accidents will become considerably lower. With autonomous vehicles, we are likely to see reduced mobility and infrastructure costs as well as a reduction in crime. It’s a whole new area, and although there will be reduced risks in some ways, there will also be more factors to consider; for example, autonomous vehicles could be exposed to cyber attacks, and that’s something that will need to be looked at closely – how easy and accessible are these vehicles to people who might use them for illegal proposes? What securities measures will need to be put in place to stop breaches from happening and cars being taken over remotely?”
One study showed that as many as 94% of accidents are attributable to human error. With driverless vehicles significantly decreasing risks, what would this mean for the insurance sector?
“Vehicle insurance as we know it will inevitably change,” Matthews said. “It could potentially be more a public transport type of cover than an individual one, and as far as the premium risk pool goes, that is also likely to see a considerable drop.”
“Overall, it will be a big learning curve for everyone,” she said. “Even things like licensing and speed limits could well become a thing of the past. There will be different risks associated with autonomous vehicles, and that is going to take some thinking about. Within the next decade, we could potentially see a very different ownership model when it comes to vehicles. Much of this will of course depend on the Government and people being willing to adopt technology.”
