The Rise of Self-Driving Cars and Their Insurance Needs in the Age of Autonomous Driving

In the last few years, the world has experienced notable technological advancements that have transformed several sectors. Self-driving cars are one of the latest technologies in the automotive industry that have revolutionized the medium of communication among individuals.  The growth of self-driving cars has created a greater demand for insurance policies tailored specifically to these vehicles. Most auto insurance policies are designed to offer benefits to the drivers who drive them. However, in this case, the primary factors determining the car insurance premium are the installed technology and safety features equipped in the vehicles.

What factors are considered when determining self-driving car insurance policy?

Before knowing about the prime determinants for self-driving car insurance policy, let’s first understand what exactly these cars are. Self-driving cars are fully programmed cars that run without drivers. In these vehicles, users just have to enter the location and then simply enjoy the drive. These cars have advanced sensors that allow them to adapt to various scenarios and maintain travelers’ safety. Some of the major factors of the cars that are mainly considered while finding out the policy premium for a self-driving car include model and variant of the car, type of insurance policy, add-ons selected, geographical area, insured declared value, etc.

Apart from this, some other important points need to be considered when calculating premiums. The level of automation is one of the key factors integral at the time of self-driving car design. The need for human intervention varies at each level, influencing the premium margin accordingly  Moreover, as the chance of human error is reduced with automation, the frequency of accidents is minimized. Thus, the claims would also go down, leading to a reduction in the premium.

Why is there a need for self-driving car insurance?

Therefore, car insurance is essential to avoid expenses for machine breakdowns. On the other hand, when it comes to automation levels, only level 5 automation does not require human intervention. This means other levels of cars include the roles of humans which are susceptible to human errors. Hence, car insurance is required for these cars. ccording to the Motor Vehicles Act of 1988, vehicles operating on public roads in many Asian countries are required to have mandatory third-party insurance. As per this legal compliance, insurance for self-driving cars is also essential.   Further, the rising provision of broader coverage plans that defend against cyberattacks and data breaches is expected to boost the growth of the self-driving car insurance market. According to Allied Market Research, the industry is predicted to rise at a CAGR of 15.3% from 2023 to 2032.

Aviva’s visionary move to expand self-driving insurance project in the UK

In March 2024, Aviva, a British multinational insurance company, and Darwin Innovation Group, an autonomous vehicle operator partnered to launch the longest-running self-driving passenger service in the UK. This new shuttle has LiDAR sensors, 3D maps, cameras, and self-driving software to channel routes, stop at destinations, and detect obstacles. With this launch, Aviva aimed to strengthen the development of insurance products for autonomous vehicles across the nation.

Inuit and Zendrive teamed up to enhance usage-based auto insurance

In June 2024, Intuit, an American multinational business software company joined hands with Zendrive, a mobility risk intelligence provider. With this initiative, Intuit aimed to promote the development and adoption of Karma Drive, a telematics-powered, usage-based auto insurance product provided by Credit Karma, the business unit of Inuit. According to Joe Kauffman, the president of Credit Karma, this acquisition has enabled the company to offer usage-based auto insurance more accessible than ever before, by utilizing Zendrive’s technology and experience. He added that these self-driving insurance products are expected to bring more transparency, fairness, and accuracy to consumer auto insurance pricing while providing insight into their driving behaviors.

Cheche Group partnered with JI YUE to launch a customized insurance system

In September 2024, Cheche Group Inc., a leading auto insurance technology company announced its partnership with Shanghai Jidu Automobile Company Limited (JI YUE),   With this agreement, Cheche launched a customized system for JI YUE, creating a channel for purchasing auto and non-auto insurance products from both online and offline platforms. This system is designed by integrating Cheche’s core platform and is equipped with resources to enhance and strengthen JI YUE’s sales channels. In addition, it is also useful for improving account settlement capabilities. Cheche’s innovative system has offered a one-stop insurance service platform for JI YUE car owners. Along with this, the company also envisioned capitalizing on JI YUE’s developments in intelligent driving, by collaborating on futuristic autonomous driving insurance projects.

Endnote

Self-driving cars are expected to become a reality in the coming years. The rising adoption of electric vehicles and continuous advancements in modern technologies are expected to increase the adoption of these cars to reduce road accidents and bring a revolution in saving natural resources. Moreover, the active participation of insurance companies in offering extensive policies for these cars is expected to create wider opportunities in the sector.

✍ **𝑨𝒓𝒕𝒊𝒄𝒍𝒆 𝒘𝒓𝒊𝒕𝒆𝒓: Rosy Behera

LinkedIn ID: (34) ROSY BEHERA | LinkedIn

2 thoughts on “The Rise of Self-Driving Cars and Their Insurance Needs in the Age of Autonomous Driving

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