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Driverless Cars Threaten to Crash Insurers’ Earnings

wsj.com

61–70 of 125 posts

Re: Driverless Cars Threaten to Crash Insurers’ Earnings

#61

Earlier quoted context omitted.

There are many forms of gambling that were prohibited until they were renamed in a way that appeased influential religious communities. Off the top of my head I can think of insurance products and the futures market. But if you can find citations that will be very helpful for me!

Insurance is used for a fundamentally different purpose, to socialize risk. A good quote I found: insurance transfers risks that already existed; gambling creates risk for entertainment.

A rationalization for Evangelicals. Once you realize the distinctions are all rationalizations to appease people that require cultural distinctions, you'll stop trying to rationalize a difference between financial chances.

Think "why am I more comfortable with gambling because my state mandates I pay it" and think about what circumstances led to that, and then think about what prompted you to care at all.

Re: Driverless Cars Threaten to Crash Insurers’ Earnings

#62
post #28

Earlier quoted context omitted.

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…

> 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. 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 rel…

Some traffic systems, such as red light timing, actually have been shown to increase accidents. But they also increase revenue

edit: source that I haven't read, but there are numerous sources from a simple web-search: http://www.illinoisherald.com/articles/2014/q4/chicago-red-l...

Re: Driverless Cars Threaten to Crash Insurers’ Earnings

#63

I'd expect the WSJ to know better -- this article (while technically correct) miscategorizes how insurance works. 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…

I don't see insurance dying overnight, but if their cars are solely used in driverless mode[1] then it's in the manufacturers' interest to take on that risk directly: since they're ultimately liable for [virtually] all risks cars are compulsorily insured for[2] it makes sense to cut out the middle men and keep that float to themselves as well as streamlining the claims process. The ability to make mandatory insurance contingent on getting cars serviced expensively at approved dealers is a nice little bonus. So you get the mandatory insurance certificate with the car,[3] and a whole bunch of B2C auto brokers and insurers are left selling policies which are entirely optional and which consumers consider much more unlikely to be claimed on

Sure, some parts of the industry (Lloyds reinsurance syndicates underwriting the portion of the manufacturers' liability they're not willing to self-insure, which is probably the idiosyncratic risk of a negligence claim over software updates) still exist, but all those B2C players are fighting for a much smaller share of the pie which continues to decline as more people switch to exclusively driverless cars and they don't really get stolen any more.

[1]I think this is a very big if in the foreseeable future, but it seems to be assumed by the article.

[2]there's still a market for insurance against vandalism, fires not caused by the car itself and [to a much more limited than before extent] theft, but that's probably not compulsory in most jurisdictions and so a much tougher sell for the insurance companies.

[3] they could even build in the annual policy renewal fee for the design life of the vehicle into the purchase price if they really wanted to. I'm also assuming here that there's no legal impediment to individuals' motor liabilities being underwritten by a division of the vehicle's manufacturers in most jurisdictions.

Re: Driverless Cars Threaten to Crash Insurers’ Earnings

#64

Earlier quoted context omitted.

> 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. 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 rel…

Some traffic systems, such as red light timing, actually have been shown to increase accidents. But they also increase revenue edit: source that I haven't read, but there are numerous sources from a simple web-search: http://www.illinoisherald.com/articles/2014/q4/chicago-red-l...

http://www.washingtonpost.com/wp-dyn/content/article/2011/02...

They also save pedestrian and motorist lives.

Re: Driverless Cars Threaten to Crash Insurers’ Earnings

#65
post #10

Earlier quoted context omitted.

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…

Corporations have been doing illegal things for a while now. All you have to do is to share a reasonable part of illegal proceedings with the government - it's called a 'fine'.

Please don't be edgy and dismissive on HN

Re: Driverless Cars Threaten to Crash Insurers’ Earnings

#66

Earlier quoted context omitted.

Affordable and accessible medical care is a prerequisite to that. After the injury aspect is taken out of the picture then it would make sense for everyone to insure as much as they want (e.g. homeowners insurance)

If I don't want to be insured for own personal bodily injury, why should I be forced to buy that product in a free market? What if the premium simply isn't cost effective? By forcing anyone to buy a product you are creating a captive market and thus insane prices. Especially when the businesses involved are explicitly allowed to collude[0]. Sounds like a bad deal for everyone but the insurance companies. [0] https://…

My intention was to point out that if the medical side of things was a non-issue it would be much easier for society to get behind the idea of "just insure your own property however much you want"

Re: Driverless Cars Threaten to Crash Insurers’ Earnings

#67
post #9

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…

What makes you think Google will fight my ticket on my behalf? Surely, it would benefit them to have traffic laws written to clarify that the occupant is still liable for any laws his self-driving car breaks. 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…

I envision a concierge service, with a low monthly fee or high one-time usage fee, for road side legal and technical counsel.

If the car is already driving, why should a a passenger know which rule the car was following at the time an officer said a moving violation occurred.

The concierge could access the car's driving records on the fly and provide specific reference to traffic laws at that specific jurisdiction. The officer and the concierge could hash out the entire interaction roadside and it could recorded.

Meanwhile, the passenger/"driver" would be sitting there mouth shut, hands on wheel, and hopefully not attracting any attention beyond the moving violation.

Re: Driverless Cars Threaten to Crash Insurers’ Earnings

#68
post #60

Earlier quoted context omitted.

> 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. 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 rel…

Many regulations are of questionable validity, but do you really want to be in a machine that you have no control over? Would robotic drivers be better at things like merging, keeping distance, not over correcting? Yes. But people will still want to intervene when it doing something dumb like driving into a pond, or gets stuck on a median and cannot figure out how to get off. Driverless cars will probably not be magi…

> do you really want to be in a machine that you have no control over

Yes. I regularly fly in planes, which I have no control over, and which spend most of their time on autopilot. I also regularly deal with machines that do their jobs far better than I could, and I feel no desire to take over and do those jobs worse. Why should that answer change when the stakes get higher and the cost of a mistake goes up?

(That doesn't mean I want to beta-test an experimental driverless car; it does mean I'm eager for a non-experimental one.)

> But people will still want to intervene when it doing something dumb like driving into a pond, or gets stuck on a median and cannot figure out how to get off.

A vehicle that did any of those things would be considered broken in a deadly way. The solution isn't to hand people broken vehicles that they sometimes need to take over from; the solution is to not call a car driverless until it handles those situations (generally by not getting into such situations in the first place).

> Driverless cars will probably not be magic pods that whisk you around.

Yet.

Re: Driverless Cars Threaten to Crash Insurers’ Earnings

#69

Earlier quoted context omitted.

Citation on the 1 in 7? That sounds like it comes from the same people who make any speeding offense on par with DUI and having an at fault accident in most points based systems. One in seven people with a license not having insurance I can see (because they might not have a vehicle) but one in seven vehicle/driver pairs on the road not being insured for that combination seems very high without monkeying around with…

It actually sounds like a somewhat outdated (the trend is down and the most recent figure I can find is about 1 in 8 [0], rather than 1 in 7) figure derived from insurance claims (which may systematically misstate the share of drivers or driver/vehicle pairs, but probably is reasonably accurate in determining what people actually care about -- if I need to go after someone for damages resulting from an accident, will…

How do they define "uninsured."

My girlfriend isn't on my policy because she never drives my truck. Likewise the vast majority of the time I drive her car it's something along the lines of repositioning vehicles in the driveway. If I were to get in an accident in her car chances are there'd be a bunch of fighting with insurance but our insurance (same company, different policies) would probably wind up paying. Would I count as an uninsured motorist in that hypothetical situation? III has a very obvious incentive to portray insurance as something worth having as opposed to a waste of money (which it will be for most people who don't get into a situation involving medical or large amounts of property damage). I think they'd consider me uninsured in that situation.

Reporting rates also have an effect. There's a much higher reporting rate for small accidents with a single uninsured party than for similar accidents in which both parties are insured. If one party is insured it's in that parties interest to maximize documentation unless it's undeniably their fault. If both parties are insured then it's much murkier, damage amount, deductibles, who's at fault, etc, etc. come into play and if the dollar amount is relatively low it's often more faster and cheaper for them to settle the matter without insurance company involvement. Basically, if someone without insurance gets in a parking lot accident the vast majority of people will report it whereas that's not necessarily the case when both parties are insured.

Re: Driverless Cars Threaten to Crash Insurers’ Earnings

#70

Earlier quoted context omitted.

Corporations have been doing illegal things for a while now. All you have to do is to share a reasonable part of illegal proceedings with the government - it's called a 'fine'.

Please don't be edgy and dismissive on HN

I am not edgy, I am pointing out that just if something is 'illegal' it does not mean corporations won't do it.
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