Americans Want Self-Driving Cars for the Cheaper Insurance

Skip to story Semi-autonomous features like Volvo's "Queue Assist" can already net drivers lower insurance premiums. Volvo

Americans want self-driving cars. Not because they’ll save loads of time or ease the commute nightmare, but because it will save them money.

Of the 1,500 US drivers the Boston Group surveyed in September, 55 percent said they “likely” or “very likely” would buy a semi-autonomous car (one capable of handling some, but not all, highway and urban traffic). What’s more, 44 percent said they would, in 10 years, buy a fully autonomous vehicle.

What’s most surprising about the survey isn’t that so many people are interested in this technology, but why they’re interested.

The leading reason people are considering semi-autonomous vehicles isn’t greater safety, improved fuel efficiency, or increased productivity—the upsides most frequently associated with the technology. Such things were a factor, but the biggest appeal is lower insurance costs. Safety was the leading reason people were interested in a fully autonomous ride, with cheaper insurance costs in second place. (Reasons not to want a robo-ride include fear of hacking, distrust of the technology, and good old love of driving.)

This is unexpected, because how insurance will shake out usually is on the “tricky things to be figured out” side of the ledger, alongside how the government will test and regulate the vehicles. The current insurance business model—car owner has insurance to protect himself from the risk of causing a crash—doesn’t make sense if the computer’s in charge. And if we can make cars that rarely crash, do we even need insurance? We certainly won’t need to spend as much on it (currently about $800 a year, according to the National Association of Insurance Commissioners).

But just as automakers are sneakily getting us to accept self-driving cars, insurers are quietly adapting to the change.

In the near term, semi-autonomous features—blind spot monitoring, adaptive cruise control, collision avoidance—will lead to fewer crashes. That reduces costs for insurers, says Xavier Mosquet, head of Boston Consulting Group’s North America automotive division. That’s why you see lower premiums for safe driving records, and discounts for having things like anti-lock brakes.

Features that reduce crashes—like Volvo’s automatic braking—also reduce costs for insurance companies. Volvo

That’s why “a vast number of insurance companies” are exploring discounts for those semiautonomous features, Mosquet says. For example, drivers who purchase a new Volvo with the pedestrian protection tech qualify for a lower premium. “The cost to [the insurer] of pedestrian accidents is actually significant, and they’re going to do everything they can to reduce this type of incident.” That’s already started in Europe and is spreading to the US.

The tricky part for insurers is figuring out how much each advanced driver assistance system feature is worth to them. Boston Consulting Group is helping with those calculations, and it’s not a major hurdle.

The harder question comes when we hand over nearly all the driving to our robots. Liability—who’s responsible in a crash—will be an issue. What will likely happen, Mosquet says, is a shift from driver liability to product liability, so blame and cost will be assigned to the automaker, or whatever supplier is at fault in the event of a crash. Figuring out whom to blame, exactly, won’t be easy, and regulators will likely step in. Again, a tricky situation, but nothing that will stop progress.

So yes, we’ll be rewarded financially for giving up the wheel. But in the long run, as fully autonomous cars take over our roads, the insurance companies will have to adapt. They can’t argue against saving lives, but “they’re very, very concerned,” says David Carlisle, chairman of the board of auto industry consultancy Carlisle & Company. “If the car can’t wreck anymore, those premiums have got to go down drastically.”

We’re not sure just yet how they’ll stay in business (higher flood insurance premiums to go along with sea level rise?), but we’re glad that letting the robot drive won’t just keep us alive and productive on the road—it’ll save us money, too.