What will the future of car insurance be like for Arizona drivers?

Future of Car insurance for AZ drivers

Car insurance has not changed much in decades. The reason for that is cars haven’t changed all that much in decades. But new technologies, automotive production methods and anti crash avoidance technologies are poised to make significant changes to automotive insurance that will be a welcome change for motorists. The future of car insurance will be very different from what we have today.

Insurance Consulting agency Deloitte Consulting predicts in a recent report that the future of road travel will become significantly changes based on two factors: the self driving or semi-autonomous vehicles, and shifts in driving and transportation preferences such as a switch to shared transportation.

Each of these scenarios opens up new needs for existing insurance plans and creates new insurance customer segments looking for passenger automobile related coverage. These needs, once realized, will driveto new insurance coverages, and classes, as there will be a demand for new ways of classifying what the insurance industry calls “Insureds”.

The Deloitte study predicts the future will call for four new states of insurance:

Future scenario 1: Personally owned, driver-driven vehicles

This is the most conservative state, which emphasizes the large assets tied up in today’s system, the report says.

In this vision, private ownership stays as it does now, where people are unwilling to give up the freedom and personalization that comes with owning your own car. It also makes the assumption that car owners will never give up their cars and therefore fully diverless cars will never come to be. However it does factor in the widespread use of computer controlled anti crash technologies and the insurance savings that will result.

In this scenario, the traditional model of personal auto insurance will continue, the vehicle owner will be the primary named insured, and the coverages will be the familiar ones of driver liability, collision and comprehensive.

Future scenario 2: Shared driver-driven vehicles

With companies like Google and Apple now entering to car making scene, following paths established by independent auto manufacturers such as Tesla, and Fiskar, Even on demand ride sharing services such as Uber factor into this second scenario which sees an emerging trend of shared access vehicles. This new trend would be fueled by economic scale and increased competition that drives the expansion of shared vehicle services into new geographic territories and new consumer segments.

This scenario s a fit for mostly urban dwelling passengers who value the convenience of point-to-point transportation and the cost savings of expansive car-sharing and ride-sharing networks.

This scenario still retains the human behind the wheel; however, this group of people includes fleets of vehicles such as taxicabs and limos, owner/operators of “black car” services and car rental companies.

The vehicle owner could be an individual or a business, and the coverage would be for driver, liability, collision, and comprehensive. Uber, Lyft and similar ride-sharing services would fall in this category.

Future scenario 3: Personally owned autonomous vehicles

In this scenario, the assumption is made that fully autonomous drive technology is viable, safe, convenient and economical, however consumers still insist on owning their own cars.

Insurance rates see significant reductions because of driverless functionality and its demonstrated safety, reliability and other ancillary benefits. But 100 years of our love affair with or cars keeps going into the driverless car era.

This scenario would require a new product that the report calls “personal autonomous vehicle insurance,” or “AV coverage.” The individual vehicle owner would require coverage for comprehensive and liability while the AV system manufacturer or the operating system provider would require a commercial policy that includes AV product liability. This two-party insurance scenario would be completely new to the industry. You insure the roadworthiness of the car, the AV insurance owns the liability if the self driving systems were to ever fail.

Future scenario 4: Shared autonomous vehicles

This scenario in my opinion is the least likely to happen and most utopian of all the scenarios. If anything this would only come to be with the next generation or two of car owners. This scenario combines both autonomous technology and ride sharing mobility.

In tis scenario, companies offer a range of passenger experiences to meet varied needs at differentiated price points. The earliest adopters are likely to be urban passengers, because few of them own cars now, and they’re credited with the popularity of ride-sharing services such as Uber and Lyft. Companies like the the Google car are banking on this type of service becoming widespread, and as the infrastructure expands, these new fleets of autonomous shared vehicles could spread to densely populated suburbs and beyond.

In scenario 4, all stakeholders would have commercial AV insurance. The companies who own the vehicle fleets would require comprehensive and liability insurance. The AV system manufacturer or the operating system provider in this state also would require a commercial policy that includes AV product liability.

How will this future impact today’s Arizona driver?

The future could become an era of insurance reinvention as carriers could incorporate coverage into new or other products and services. The report predicts that self-insurance could emerge as a dominant model for large shared vehicle fleets.

It also predicts that the ratio of personal to commercial auto policies will begin to shift as shared vehicles become more prevalent than individually-owned vehicles.

But most importantly, the shared insurance burden and fewer crashes will mean more money in your pocket whether you own your car, or not.

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