Autonomous vehicles could slash insurance premiums, report says

The pace with which autonomous technology is adopted in the auto industry may push auto insurance costs to new lows.

With the cost of living on what seems like an interminable ascent, just about everyone could use some extra change in their pockets. It's part of the reason why cheap full coverage auto insurance is so sought after.

That said, while it may be several more years before they go mainstream, autonomous vehicles have the potential to lower premiums substantially for hard-working Americans, according to a newly released forecast.

It's not a matter of if driverless automobiles will hit the roads, it's when. Though the actual date remains somewhat shrouded in mystery, industry experts believe that the first entirely self-driving car may be commercially available by 2018 at the very earliest. Depending on the rate at which this kind of autonomous technology is adopted, insurance premiums have the potential to fall by 20% approximately 20 years from now, reinsurance firm Aon Benfield predicted in its latest report, "Riding the Innovation Wave."

Paul Mang, Aon Analytics CEO, stressed that while this type of reduction in auto insurance premiums is quite possible, there are a lot of unknowns that still have to play out in order to get a clearer picture.

"Adoption of autonomous vehicles will of course be affected by many variables such as regulatory challenges, cost to the consumer, safety, vehicle ownership preferences, and the technology itself," Mang explained. "We as an industry need to act quickly to ensure that we have the products available to align to the new paradigm; if we fail to do so, we only invite disruption."

40% reduction possible by 2050

The savings may go even deeper depending on the uptake of self-driving motor vehicles. Aon reported that by 2050, average premiums could be slashed by as much as 40% from where they are currently.

Part of the reason why automation has the potential to lower the cost of insurance stems from their level of safety. Several studies in recent months suggest that they may be safer to operate than traditional models, including one conducted by researchers at Virginia Tech Transportation Institute.

"When compared to national crash rate estimates that control for unreported crashes, the crash rates for the self-driving car operating in autonomous mode when adjusted for crash severity are lower," VTTI researchers wrote in the study that was released in January.

They cautioned, however, that there is still a degree of uncertainty, a concern shared by officials with the National Highway Traffic Safety Administration.

In an attempt to learn more about self-driving vehicles and introduce them the public at a gradual, methodic pace, NHTSA recently submitted recommendations for how these cars are to be tested on the roads. It also developed a 15-point safety assessment that automakers will need to satisfy in order to begin mass production.

"Automated vehicles have the potential to save thousands of lives, driving the single biggest leap in road safety that our country has ever taken," noted Anthony Foxx, Secretary for the U.S. Department of Transportation. "This policy is an unprecedented step by the federal government to harness the benefits of transformative technology by providing a framework for how to do it safely."

He added that while there's an understandable degree of uneasiness that comes with introducing something that's foreign, there were misgivings about seat belts and airbags when they first came on the scene. Today, these formerly controversial safety elements have saved lives by the hundreds of thousands.

More details of the four-part policy statement can be found at the Transportation Department's website, which includes a 38-minute video clip of Secretary Foxx making the historic announcement regarding the safe development of automated vehicles in Washington, D.C this past September.

How you can save starting today

The year 2050 may be a long way off, but there are plenty of strategies you can implement now to lower your premiums. For starters, you may want to consider raising your deductible. By assuming more of the cost, what you spend in annual premiums will naturally decline.

Another option is taking advantage of discounts. Insurers, including Elephant, have loads of savings that are waiting to be had, including responsible driver, multi-policy, and anti-theft, among several others. In fact, if you're eligible for all of Elephant's discounts, you could roll back your premiums by as much as 40%.

For more details on lowering your insurance bill, talk with your Elephant Auto Insurance representative.