Self-driving cars could mean drivers will see significant savings on insurance premiums, but that is in the distant future.
In the short term, insurance companies will see a boon because as self-driving features become more prevalent, the number of crashes will decrease,
according to a report issued by Moody's Investors Services this week.
The report, Auto insurers face long terms challenges from self-driving cars, states that insurance companies will be obliged to rethink their business models.
"Accident avoidance technologies are becoming more common in cars which should reduce the number of accidents and boost insurer profits," said Jasper Cooper, Moody's Investor Service assistant vice president, in a statement. "However, auto insurers will also face higher auto repair costs from embedded cameras and sensors which are often located in or near bumpers.
Bumpers are no longer just pieces of rubber or metal. Rather, they are made of plastic and carbon-fibre, covering absorbant materials and sensors that can be expensive to fix.
One predicted benefit of self-driving cars is fewer crashes, leaving insurance companies to ponder their roles.
"Widespread adoption of self-driving cars is still decades off, but it raises questions of what an auto insurer's role will be," said Cooper. "Regulators, lawmakers and courts will have to determine how liabilities are shared among insurers, automobile manufacturers and technology companies."
The report forecasts near-universal adoption of self-driving cars in the U.S. by 2055 and a common presence of driverless cars on the roads by 2030.
Many car companies are setting that same year, 2030, as the goal for producing a fully autonomous car.
Boston Consulting Group reports self-driving features could represent a $42-billion (U.S.) market by 2025 and Business Insider Intelligence estimates there will be 10 million self-driving cars on the roads by 2020. Mercedes-Benz, BMW, Audi, Honda, Ford, Toyota, General Motors, Kia, Tesla, Nissan, Volvo and tech giant Google are all in the game. But there are still a number of challenges ahead.
Most of the testing is being conducted in ideal road and weather conditions. The sensors, which drive the car, can't see through snow and have trouble with rain.
In addition to changes to insurance, laws and people's attitudes will have to change.
Presently, only 25 per cent of Canadians see the appeal of self-driving cars, according to a study conducted by consumer market research firm, GFK. And a NerdWallet survey last year found that half of licensed drivers aren't interested in owning a self-driving car.
With a report from Reuters
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