Among the myriad different ways that the arrival of fully-autonomous, self-driving cars could affect society – less congestion, fewer traffic fatalities – there is one question that seldom makes headlines: What will happen to car insurance?
The simple answer is: it will likely be a far less lucrative enterprise than it is today. So says billionaire investor Warren Buffett – Chairman, President, and CEO of holding company Berkshire Hathaway. Car insurance company Geico is a wholly-owned subsidiary of the firm.
“If [self-driving cars] make the world safer it’s going to be a very good thing, but it won’t be a good thing for auto insurers,” Buffett said at Berkshire Hathaway’s annual investors’ meeting last Saturday, according to Business Insider. “If driverless cars became pervasive it would only be because they were safer. That would mean that the overall economic cost of auto-related losses had gone down and that would drive down the premiums.”
The question for those who love to drive themselves then becomes: Would human-driven cars also be less expensive to insure? It’s reasonable to suspect that they would, given that autonomous vehicles achieve a sizable enough market penetration, but that could take years – maybe decades. The world is still several years out from a mass-production self-driving car, let alone an affordable one, so there are many hurdles left to clear.
Ultimately, the only certainty is that if self-driving cars ever do start to replace an appreciable percentage of the world’s automobiles, the technology will be economically disruptive in the truest sense of the word. Buffett later added that “the driverless trucks are a lot more of a threat than an opportunity to Burlington Northern.” (Burlington Northern is a rail transport company, and another subsidiary of Berkshire Hathaway.)