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The 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 in…
The 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 st…
From the insurance company's perspective, they need enough of a capital reserve to mitigate the risk of a sudden shock in payouts. Spreading across larger geographic areas mitigates that risk somewhat, as does spreading through multiple businesses. Auto insurance is probably a particularly nice gig since it's relatively unaffected by things like natural disasters and would have a relatively smooth cashflow.
So, less capital from auto insurance means more capital has to come from somewhere else - more borrowing, if nothing else. That probably translates into either reduced profitability, or higher premiums on other kinds of insurance.
I'm not an actuary by any means, but that's my guess.
The 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 in…
"The car was obeying the rules of the road too well. It was suspicious."
Why 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?
Why 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 incent…
Interestingly, that is not true for insurance companies[0], at least at the federal level. They are exempt from a lot of federal law.
>The McCarran–Ferguson Act, 15 U.S.C. §§ 1011-1015, also known as Public Law 15,[1] is a United States federal law that exempts the business of insurance from most federal regulation, including federal antitrust laws to a limited extent.
[0]https://en.wikipedia.org/wiki/McCarran%E2%80%93Ferguson_Act
Why 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.
> The government mandates we MUST have insurance, so they know they've got a continued source of business. The average American has absolutely no way to correlate the amount they pay for insurance to what it costs the insurance company. I have a hard time reconciling these two sentences. In the first, you sound like a passionate advocate of the free market. In the second, you act as though you have never heard of suc…
>N.b. Personally, I am much happier knowing that (almost) all the people potentially plowing into me on the highway carry insurance.
Do you live in the US? Where 1 in 7 drivers are uninsured?
The 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 in…
Such as keeping your car in a minimum condition. Or having legacy system support. It needs to get patches to update to newer network types.
Completely unattended driving (enter destination and taking a nap) is still up for debate. Requiring a machine to be watched seems like a pretty easy-to-pass regulation.
Current traffic laws are written for human drivers. If there are robotic drivers on the road other traffic laws will be passed for those.
Correct 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.
There have been a handful of religious communities, like the Mennonites, that don't believe in commercial insurance, but they instead have a community that will step in and help when something happens to one of its members. So it's still a form of insurance, they just don't use money.
Correct 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.