I don't think that is necessarily true.. The cost of insurance is based on the average expected payout per customer... I don't think the average payout will increase, as being a human driver won't suddenly become MORE dangerous, at worst it will stay the same.
No that's not how auto insurance works. It's a commodity with high competition and low profit margins. Insurance companies set prices based on expected losses. There's no reason to think that the arrival of level 4 autonomous vehicles would cause an increase in losses on human driven vehicles. If one insurer jacks up prices then the others will undercut them to gain market share.
> Once automated cars are a realistic option, insurance companies can properly price insurance for human drivers much higher (comparatively speaking).
What's "proper" about raising the prices for no reason? If they start pricing human drivers higher than they currently do, some other insurer will just undercut them.
Do you expect accident rates among manually-driven cars to substantially increase? If not, why do you expect insurance premiums to substantially increase?
This is a frequent argument I keep seeing about the cost of insurance rising as autonomous vehicles are introduced. There's no reason they'll rise past what they're currently charging; insurance takes into account current risk. In the future, the risk if anything should decrease.
It'd seem the insurance rates would eventually be standardized to per car & driving technology; rather than taking into account any factors about the driver.
yes, but that doesn't explain why the underlying risk of insuring human drivers would rise. Nor does it explain why, since the underlying risk is the same, Progressive wouldn't offer lower rates than Geico's.
He means insurance prices will rise for those who choose to remain self-drivers. However, you bring up a good point, incidentally, that even if the insurance costs more for a self-driver versus auto-pilot, rates will go down for _both_ either way due to much safer roads.
Insurance is about risk pools, if Level 5 becomes a reality the risk of a human driver will go up, and has more and more people adopt level 5 (which they will contrary to what people on here think) the number of human drivers to spread that risk over will go down, small risk pools with increasing amount of risk means higher premiums
This kind of log data will only result in lower insurance premiums for everyone and evidence useful in court.
As long as everyone needs coverage, and accidents remain the same, the insurance company will need to pay out about the same and therefore collect something similar. That means that average premiums will not change across the population.
However you can move costs from lower risk drivers to higher risk drivers. Which may help YOUR premiums.
Doesn't that make sense? Insurance is to cover immediate problems, but the risk given the driver increases with each claim (I'm assuming, that just makes sense to me). So, premiums should reflect this.
If your theory is that they can raise prices arbitrarily for profit, then you have to explain why they have not already done so.
Insurance companies complete on actuarial accuracy. I'd rather bad drivers pay more, and be in incentivized to drive better, than young drivers and all drivers pay more.
Insurance cost isn't about the number of customers, it's about risk distribution and concentration. Flood insurance in high-risk areas is expensive because claims are frequent, large and concentrated (large percentage of customers making claims at the same time).
Unless future drivers become more accident-prone than today's drivers, their premiums will be similar. I don't see much incentive for adverse selection.
The point GP was making is that as autonomous vehicles replace manual, the likelihood of an inter-vehicular accident should also fall for the remaining manual vehicles, lowering their premiums. A nice positive externality - more reason to subsidize autonomous vehicles.
Why would insurance cost more than it does today? Presumably new safety systems will trigger discounts to the degree that they cut the number of dollars that insurance companies need to pay out on their policies. But I see no reason that a profitable policy today wouldn't be profitable in the future just because other cars have more advanced safety systems.
I don't think that was mis-parsed - I think that JabavuAdams is (rightfully ?) cynical that the insurance companies will lower prices.
Rather, they will make the current price the standard for (self-driving cars), and increase the price for (human-driven cars), thereby ensuring more money for themselves.
The insurance industry is fairly heavily regulated (in the US). They can only charge different rates based on specific factors. This means that your entirely imaginary (and therefore entirely unconvincing) scenario will remain entirely imaginary (and unconvincing).
Personally, I would prefer if car insurers could price discriminate more based on data. I think this would lower rates for me personally, both in the short term because I try to cultivate safe driving habits, and in the long term because it would create an incentive for everybody to try to drive more safely.
This doesn't really have anything to do with the question. It's not about the gradual increase of rates over time generally, it's about relative rates due to behavior tracking.
If reckless driving can increase insurance premiums relative to others while ideal driving has no effect on your relative premium, it's just a naked money grab. All downside means drivers should be against it.
Why would rates skyrocket? They should go down. With autonomous cars the percentages of accidents should decrease. Insurance is based on percentages, so the cost should go down, not up.
And as less and lass cater to your now fringe activity, you will be herded into a specialty insurance, and it will go up. It will be a 180 from 100years ago. The rich will pay to drive themselves.
Why does it go up? The price isn't as high as it is because there's nothing better. It's based on the expected cost to the insurer, and that should drop when the predictability of the other vehicles on the road increases.
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