U.S. Insurance Market Braces for a Seismic Shift Due to Driverless Cars

January 24, 2017 - The idea of driverless cars was once relegated to the world of science fiction, but that world is quickly becoming a reality. Ford Motor Company recently announced plans to issue $2 billion of debt in order to boost its spending on self-driving cars, mobility services and electric vehicles. This development occurred just days before Michigan’s governor gave the clearance to test cars without steering wheels or drivers on the state’s highways.

While many eagerly anticipate a world where commuting is left to intelligent machines, U.S. insurance companies are facing a significant and massive disruption to their largest line of business. The National Association of Insurance Commissioners reported that in 2015 alone, U.S. property and casualty insurance companies were paid $231 billion in automobile insurance premiums. With drivers being removed from liability – since in the world of self-driving cars, the cars themselves are the drivers – there will be no negligent drivers. Instead, accidents will result in claims of defective products, potentially putting manufacturers on the hook for assuming liability. Accordingly, the U.S. insurance industry can expect a decline in automobile insurance premiums and an increase in products liability insurance premiums.

Butler Rubin partner Robert N. Hermes recently authored an article on how the U.S. insurance market is preparing for what he anticipates will be a seismic shift due to driverless cars. The article, which is titled “U.S. Insurance Market Braces for a Seismic Shift Due to Driverless Cars,” published on ALM’s InsideCounsel website on Jan. 23.

To read a PDF of the full article, click here.