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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.
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.
This becomes absurd with self-driving cars. There are three types of collisions with human-driven cars:
1. Those caused by driver negligence.
2. Those caused by the owner failing to properly maintain their vehicle.
3. Those caused by a manufacturing defect.
With self-driving cars, the first one is impossible. A car that follows the law to the letter is by definition never at fault in a collision. The second one is still possible, but probably less likely. The car can take itself to the shop without your intervention, and I expect manufacturers would have it refuse to drive itself if you're too far off the maintenance schedule. The third category will now include bugs in the driving software, so the rate of collisions that fall under option 3 is likely to go up a bit.
Option 3 means that the manufacturer is liable, not the owner of the car. Since this encompasses the vast majority of self-driving car collisions, personal liability will no longer be truly necessary like it is today.
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.
That has the side effect of requiring the typical person to buy insurance, as they can't afford the alternate means of establishing it.
Do you think that's somehow unreasonable? What standard would you prefer for determining when an activity should require such advance indemnification, and how does "driving a car" fail that?
Edit: Sorry if you just meant to make the bland, neutral point that more casualties -> more insurance revenue -> more insurance profit, but your tone suggested you think it's an unfair subsidy somehow.
[1] It varies, but here's California's form for alternately proving responsibility, which only requires you put up a bond of $35k, which IMHO is ridiculously low considering how much you could fairly be held liable for. I guess the logic is that "if you don't mind setting aside that much money, you must have enough seize-able assets in case you harm someone"? https://www.dmv.ca.gov/portal/wcm/connect/3a81272a-0834-43b6...
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…
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…
Traffic laws are notoriously regional in the United States. The fines will adapt. There some potential infractions. 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 regula…
Requiring a human to watch implies a means for the human to intervene and take over. Having a human second-guess the machine will increase accidents. And having the controls available for the human to do so will increase complexity and decrease reliability.
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…
Traffic laws are notoriously regional in the United States. The fines will adapt. There some potential infractions. 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 regula…
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…
Also, as the other commenter said, the laws will adapt. The purpose of traffic laws is to maintain $X level of revenue, so if revenue starts to drop, local governments will increase the number and complexity of traffic laws until revenue is back to the expected level.
First of all, the article states that premiums will go down -- a reasonable, but not proven thesis. We don't know what will happen to insurance volume or prices, both of which go into calculating total premiums.
Secondly, the article doesn't really describe to readers how insurers make money -- almost no auto insurers make money directly on premiums. They make money on the float they get from premiums. Competition prevents most from making money on premiums directly, with some exceptions (GEICO, with the low cost sales model comes to mind). A reasonable assumption is that float will go down (again not proven), but we're also in an extremely low-interest-rate world right now -- something that's tough on insurers anyway.
But almost neither of these points matter.
Auto insurance is a required by most states (some states allow you to have a bond instead of insurance). It's mandated. These laws have to be repealed, and likely will remain intact for years while the transition to driverless cars happens. Similarly, liability and insurance will be required for malfunctions, tampering, and bugs.
IMO, P&C insurance, and specifically auto insurance's, imminent death has been greatly exaggerated.
Earlier quoted context omitted.
> 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…
Free Market is the US does not contain a well-informed consumer segment. That is the issue of the second sentence. >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?
So the claim boils boils down to, people don't know how to shop around for auto insurance? Forgive me for scoffing.
And 1 in 7 is a lot lower than it would be otherwise.