Look ma: no hands

Technological advancement now happens at a rapid rate, with massive innovation happening at the cutting-edge of research and development into driverless, automated transport. However, as with most new advances, there is often a pronounced lag in the rate of consumer adoption of these innovative technologies.

The reason why it takes so long for new technology to filter through to consumer level is affordability. While early adopters are willing to pay the premium attached to owning the latest technology, as is evident by the number of Teslas on the road with their auto-pilot mode in the United States at present, it will still be years before true driverless, automated transport becomes pervasive, particularly in emerging economies like South Africa.

In addition to the issue of cost, other factors such as government regulation and legislation can also hamstring the roll-out and adoption of something as complex as facilitating a driverless environment.

Gradual progression

Regardless, there can be no doubting the fact that driverless transport will become reality. While this may seem like a massive step change in the way we commute, the truth is that, like most significant advancements, it has been a gradual and progressive road to this point. For instance, the first car to offer guided cruise control emerged some 25 years ago, but that was the first step towards the driverless vehicle.

Next came park distance control, radar following, and lane assist. Driverless cars now simply bring all these technologies together. In addition, the technology that enables us to not own a car and hail a ride on demand also exists. These elements will eventually come together to deliver the massive step change that is true driverless transport - no humans behind the steering wheel - but it certainly won't happen overnight.

Insurance consequences

Ubiquitous driverless transport should result in a reduction in both short-term insurance claims and accident-related life insurance claims as most accidents happen due to driver error. If fewer people own vehicles due to the ability to simply hail a driverless car to transport them, there would also be a reduction in premium business on the short-term side.

There will also be a huge amount of data made available to insurers from the telematics in these vehicles, which could be used to better rate risk. It's hard to predict exactly how this will specifically play out, but it should mirror the impact that GPS vehicle tracking technology had on the short-term insurance market when it first became available.

One aspect of driverless transport that will prove to be the biggest challenge facing insurers is that of determining fault. When a driverless car does crash, who will be liable? Will it be the designer of driverless technology, the vehicle manufacturer, the owner, or the person in the car?

Unintended consequences

The other aspect to consider in the context of insurance is the changing types of threats that would face operators. While the risk of unintended accidents will decrease, the risk of hacking and the potential for intentional crashes will replace it.