Will driverless cars mean the end of motor insurance

Last month saw the introduction of three trials for driverless cars on UK roads. Launched by business secretary Vince Cable and parliamentary under-secretary of state for transport Claire Perry the technology took a step nearer to becoming reality and driverless cars are now allowed on public roads in this country.

But what will driverless cars mean for motor insurance and will we need car insurance in the future? Keep reading to find out more.

Trials of driverless cars begin in the UK

The House of Commons transport committee recently heard how a mixture of driverless, semi-autonomous and manual cars could be on UK roads well within the next ten years. A spokesperson said that the department was ‘working closely with industry’ to promote driverless car technology and that safety was its ‘first priority’.

Two leading insurers are already working on driverless car projects with RSA involved in the project in Greenwich, while Axa is taking part in the trials in Milton Keynes and Bristol.

While the government is looking into the practicalities of launching driverless cars, the repercussions for car insurance could be significant.

"The endgame is cars that don't crash, which will be a massive strategic challenge for the industry," said Kenny Leitch, global telematics director at RSA. "Insurance will have to change because when cars are able to drive themselves and avoid crashes the risks will change. We need to begin to understand this now."

Who will be responsible in the event of an accident?

One of the biggest issues facing the introduction of driverless cars is the challenge to establish who is responsible in the event of an accident. While 90 per cent of car accidents are currently caused by human error, there may still be crashes once autonomous cars are introduced.

Chair of the Commons transport committee Louise Ellman said that the issue of who is responsible for an accident have yet to be resolved. “Who is liable? Is it the manufacturer of the vehicle, or the technology in it? Is it the driver?" she said.

Motor insurance policies are currently based on the driver but the most likely solution is that the car manufacturer will be responsible for the safety of the product.

"There will need to be a policy protecting everything for the vehicle, including the owner and the manufacturer," said David Williams, managing director of underwriting at Axa. "This changes a huge amount of things. I don't think it is bad news for the insurance industry, it's an opportunity to be involved. We need to be open to different products."

The end of car insurance as we know it?

Some experts believe that the technology is a few years away and that there will need to be a choice of car insurance products to suit all needs.

Broker Phil Dennis said: “I think the biggest challenge will be the cultural change of getting people to give up driving their own vehicle. There will always be the need for insurance cover for those who want to drive their own car."

Motor insurance expert Tim Ryan believes that insurance will have to evolve dramatically to keep up with the new technology. He said: “I'd go as far as saying that this will be the end of conventional motor insurance.

“If the car's own automated system was to blame for a road accident, then specifically designed software to analyse the reasoning behind the crash would also be needed. The costs of such advanced technology will almost certainly inflate premiums,” he added.

Insurance broker Marc Loud agrees that motor insurance as we know it could become a thing of the past. He said: “Personally I can't see that there will be a motor insurance market in the future.

“Accidents will be the result of car malfunction, which means it will be a product liability issue. I think this will wipe out the majority of the standard motor market."