Autonomous Vehicles Predicted to Change Car Ownership, Insurance Industry

Pittsburgh is at the epicenter of autonomous vehicle research and testing. Pittsburgh Uber riders are currently being serviced by a fleet of autonomous Volvo vehicles developed in conjunction with Uber’s Advanced Technology Center in Pittsburgh. Ford Motor Co. committed to investing $1 billion over five years in Argo AI, a Pittsburgh-based artificial intelligence startup created by Carnegie Mellon University alumni and staff that combines computer science, robotics and artificial intelligence for fully autonomous vehicles that Ford plans to introduce in 2021. Recently, General Motors bought Cruise Automation for $1 billion and is preparing its Cadillac line for even greater automation.

We are entering a period of momentous change in vehicular travel and use, of comparable magnitude to the introduction of the mass production of automobiles over a century ago. In the fall of 1908, Ford began producing the Model T, the first mass produced self-powered vehicle affordable to the average American. This rapid increase in the ownership and use of automobiles not only grew the automobile industry, it spawned another major industry: automobile insurance. As the ownership and use of autonomous vehicles rapidly expands over the next decades, major changes are in store for the insurance industry. As we have experienced since the introduction of the Model-T, automobile accidents are caused by human error, product defects, natural conditions and road conditions. However, data is showing that the use of semi-autonomous, autonomous vehicles and ride sharing reduces the number of accidents caused by human error. In 2010, the Insurance Institute for Highway Safety (IIHS) estimated that a third of crashes and fatalities could be eliminated if all vehicles had the types of safety features currently available on some passenger vehicles, such as automatic braking systems, blind spot detection and forward collision and lane departure systems. We understand that some insurers offer a drop in premium rates or substantial discounts to encourage people to buy or use cars equipped with these functions.