I test drove a Tesla Model X last week.
My dad wanted to try it. And, since I was visiting him and my mom in Florida, I went along for the ride.
A 2.9 seconds, zero to 60 MPH kind of ride!
If you haven’t felt speed like that, add it to your bucket list. Seriously. It’s ludicrous!
That’s my dad behind the wheel. Notice anything strange?
That’s right. He’s not driving!
His hands are off the wheel and his feet are off the pedals.
The car is driving, by itself, down Route 41 at 55 MPH.
It steers, accelerates, brakes, and generally stays away from trouble. Most of the time.
Tesla calls it Autopilot. It’s wild…especially when you’re the one behind the wheel.
Uber, Google, Apple, and others are working on similar concepts. It’s a thing.
Driving Miss Crazy.
As you may know, my dad is a long-time insurance guy. He worked at Chubb his entire career, and then bought into an insurance training company now owned by The Institutes.
So, naturally, we got to thinking. How will auto insurance work in a future filled with self-driving cars?
Who’s responsible? The driver? Tesla? Both? Neither?
Will accidents be a thing of the past?
I’m sure most agencies selling auto insurance have wondered the same. Will the world need auto insurance anymore?
Here’s my take…
The future is (not quite) here.
As cool as Autopilot is, it’s not going to replace you or me…yet.
Yes, I do think it’s the future. No doubt. But, it’s going to take some time.
Think about the nuanced decisions you made driving to work this morning. When you came to a stop sign, who went first? Did you swerve to avoid that pothole? Was there construction blocking the road causing you to detour into the lane of oncoming traffic? Winter is coming. What about snow and ice on the roads?
The self-driving tech in today’s cars just isn’t ready…yet.
In fact, the current version of Tesla’s Autopilot is limited to certain roads and circumstances. It also requires the driver to touch the wheel every minute or so to confirm he/she is still sitting there, awake and ready to take over.
So, you can’t get in, enter your destination and fall asleep…yet.
Simply put, you need to drive! And, you still need insurance.
Planes, trains, and automobiles.
I’m a private pilot. I got my license in 1999 while going to college. Here’s a video.
Planes have autopilots. But, we still have pilots. Why?
Necessity and safety.
Airports are complicated. There are a lot of planes moving in a bunch of directions. Taxiing to-and-from the runway requires coordination with controllers, communication and pilot skill. Takeoffs and landings are the same…even though some bigger planes can land on their own in zero visibility conditions (dense fog).
Otherwise, for a vast majority of the flight, the plane is on autopilot. It’s easier and safer. Computers fly better than people.
And, what happens if something goes wrong at 30,000 feet? I’d still like to have a pilot in the cockpit. Wouldn’t you?
The same is becoming true of cars. Autopilot-like systems will help us mere humans drive better and become safer for most of our trips. Tesla is an early example of that. In fact, according to Tesla, its Autopilot system is already safer than humans.
But, we still need humans! And, we still need insurance.
Hurry up and wait.
So, what does this all mean for the insurance biz?
Here’s what Warren Buffett said about it on CNBC.
“Net it will be bad for the auto insurance industry over time if autonomous cars become a big part of the fleet. It’s very hard to tell who the winner will be.”
The key is “over time.”
Yes, I do think that all of this will impact the world (and insurance) in a big way. However, I think it’s at least 7+ years from now. Then, even if/when fully-autonomous self-driving cars become available (which they’re not yet), it’s going to take time for everyone to convert to them.
So, short-term, I don’t think too much will change. Progress will be made and the future will become clearer. Smart agencies will be paying attention and hedging bets accordingly.
In the meantime, I think a bigger threat is Uber and other car-sharing services. If millennials are buying fewer cars than older generations, that means fewer cars on the roads and fewer insurance policies needed to protect them.
But, that’s a topic for another time.