Driverless Cars Threaten to Crash Insurers’ Earnings
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Re: Driverless Cars Threaten to Crash Insurers’ Earnings
#2[deleted]
Re: Driverless Cars Threaten to Crash Insurers’ Earnings
#3Why would they lower prices? The government mandates we MUST have insurance, so they know they've got a continued source of business. They'll simply increase profits. The average American has absolutely no way to correlate the amount they pay for insurance to what it costs the insurance company.
Re: Driverless Cars Threaten to Crash Insurers’ Earnings
#4Shouldn't the drop in revenues be balanced by the decrease in payouts?
Re: Driverless Cars Threaten to Crash Insurers’ Earnings
#5The article's title is a little misleading. This would shrink the market as a whole. Revenue would go down and earnings would go down as a result. However, it wouldn't have to affect profitability.
In fact, profitability would probably go up on these policies initially since the safety benefit would be immediate, but the implied risk in the policies would only come down over time as the safety works it's way into statistics.
(Apologies if I'm not using correct terms. Not an actuary.)
Re: Driverless Cars Threaten to Crash Insurers’ Earnings
#6Correct me if i'm wrong, but wasn't "insurance" a criminal activity a mere century ago?
If so, why is it bad for it to disappear again?
Can't read the full article, since wsj have a competently implemented "To Read the Full Story, Subscribe or Sign In" shield.
Re: Driverless Cars Threaten to Crash Insurers’ Earnings
#7Why would they lower prices? The government mandates we MUST have insurance, so they know they've got a continued source of business. They'll simply increase profits. The average American has absolutely no way to correlate the amount they pay for insurance to what it costs the insurance company.
competition?
Re: Driverless Cars Threaten to Crash Insurers’ Earnings
#8Shouldn't the drop in revenues be balanced by the decrease in payouts?
What they get from the customer covers operating costs and payouts. Insurance makes money by investing that mountain of cash. Smaller mountain, smaller profit.
Re: Driverless Cars Threaten to Crash Insurers’ Earnings
#9The other bubble that driverless cars are going to pop is ticket revenue. There are a lot of police departments and cities who have structured a lot of their budget on heavy-handed enforcement of motorists.
That's going to decline significantly once driverless cars are scrupulously following the rules of the road. And any tickets that get written will be going against a giant corporation like Google, with detailed information about what the car was doing at the time of the supposed infraction, a lot more financial ability to fight the ticket, and a lot more incentive to protect their reputation.
Re: Driverless Cars Threaten to Crash Insurers’ Earnings
#10Why would they lower prices? The government mandates we MUST have insurance, so they know they've got a continued source of business. They'll simply increase profits. The average American has absolutely no way to correlate the amount they pay for insurance to what it costs the insurance company.
They can't do that because other companies will undercut them to gain market share. They could collude to set prices, but that's illegal in the US. Also, some auto insurance companies aren't organized as corporations, such as the Auto Club of Southern California, which is a not-for-profit mutual. They aren't saints, but since they redistribute most of their profits to policyholders, they don't really have much incentive to keep prices high.