Thursday, May 9, 2013

Today auto manufacturers offer some financing, tomorrow will they enter insurance market?

In January 2013, A representative from Oregon drafted a law to enable driverless cars on state’s roads. Several other states had already allowed driverless vehicles on their roads, but the proposal had some very interesting points. One of them was the fact that the driverless car manufacturer had to be liable for no less than 5M$.

Today, a sizable part of car manufacturer’s margins are due to car financing, but insurance was not part of their business. Now they might be required to enter this insurance business. How will they do it?

As written in an other post, there might come a time when a driver licence is not required anymore to operate a driverless car. The only thing this operator will have to tell the car, is to where she wants to go, perhaps using a smartphone. In this scenario, it makes no sense for the car operator to be insured.

The Oregon law proposal says: “it’s the car manufacturer”. Let’s wait and see how this issue will be solved by the different stakeholders.

By the way, this is also going to be a huge change for regular insurers, if cars do not need to be insured anymore, because it’s a sizeable part of what the average Joe pays every year for insuring its belongings: car, house, medical care, etc...

Note: when a driver licence is not required anymore, the driver is not driving anymore, that is why we should call it an operator.

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