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Selling short? More like a good time to buy! In my country, car insurence is mandatory and I don't see it being removed with autonomous cars. So the income for

by Strom 11y ago

Selling short? More like a good time to buy! In my country, car insurence is mandatory and I don't see it being removed with autonomous cars. So the income for insurance companies remains similar. Crashes will be reduced however, so the expenses for the insurance companies will go down and thus profit margins will go up.

dsfyu404ed 11y ago
crashes aren't really an expense. If someone causes $3000 worth of claim their rate will be increased such that by the time it's back to it's pre-claim level the difference between the pre-claim rate and increased will be approximately the amount paid. Don't believe me? Run the numbers. It's medical stuff that actually costs the insurance companies money. Look at modern cars. The engineers aren't the ones drooling over 10+ airbags. Setting of 10 explosions close to people in a safe way is a PITA and the hardware takes up precious weight and space that could be used for something else. Consumers aren't demanding cars that get crushed like a tin can totaled out when you get rear ended at 10mph or back into a pole. The "safety at the cost of all else" designs that have been creeping into cars do keep people out of the (expensive) hospital but at a highly increased cost of ownership and with sacrificed performance in other areas (including efficiency). The first I in IIHS doesn't stand for consumer. That's not who they're trying to protect.
- Strom 11y ago
  You leave me the impression that you would rather increase the risk of biological injury with the benefit of less property injury. I for one am happy to see the safety trends and think that it should be taken even further. In fact I see autonomous vehicles as a strategy for this. It would decrease the probability that some person will crash into me.
3pt14159 11y ago
You are looking at the first order effects only. How much do insurance companies make from meteor insurance or air plane crash insurance? Very little. These events are so rare that overhead costs cut into profit margins.
- Strom 11y ago
  I am mainly talking about the first 5-10 years of autonomous cars being available. Beyond that, I won't even attempt to make any predictions. During this first decade, most cars on the roads will still be human-driven. I don't see the insurance end-user cost being decreased much for the autonomy-capable car owners. If anything, I see it costing more during the very first years until there's more statistics & operational experience. So even if there's some price reduction during the later years of the first decade, I think it will probably only even out with the initial premium, at best. As for new overhead costs, I guess during the initial years there could be a learning period of how to handle crash drama where the car owners don't agree as easily to what happened and who's at fault. Those same first years the A.I. will probably be pretty buggy as well, with some surprising crashes. However I think the insurance companies will account for these new overheads and raise the price accordingly. Overall, I don't think investing in car insurance is a goldmine opportunity. I do think that they will continue to make nice profits and definitely shouldn't be sold short. At least not for the reason of autonomous cars by themselves, maybe sell short a selection of companies whose management you think will be unable to adapt.

by Strom 11y ago

dsfyu404ed 11y ago

crashes aren't really an expense. If someone causes $3000 worth of claim their rate will be increased such that by the time it's back to it's pre-claim level the difference between the pre-claim rate and increased will be approximately the amount paid. Don't believe me? Run the numbers. It's medical stuff that actually costs the insurance companies money. Look at modern cars. The engineers aren't the ones drooling over 10+ airbags. Setting of 10 explosions close to people in a safe way is a PITA and the hardware takes up precious weight and space that could be used for something else. Consumers aren't demanding cars that get crushed like a tin can totaled out when you get rear ended at 10mph or back into a pole. The "safety at the cost of all else" designs that have been creeping into cars do keep people out of the (expensive) hospital but at a highly increased cost of ownership and with sacrificed performance in other areas (including efficiency). The first I in IIHS doesn't stand for consumer. That's not who they're trying to protect.

Strom 11y ago
You leave me the impression that you would rather increase the risk of biological injury with the benefit of less property injury. I for one am happy to see the safety trends and think that it should be taken even further. In fact I see autonomous vehicles as a strategy for this. It would decrease the probability that some person will crash into me.

3pt14159 11y ago

You are looking at the first order effects only. How much do insurance companies make from meteor insurance or air plane crash insurance? Very little. These events are so rare that overhead costs cut into profit margins.

Strom 11y ago
I am mainly talking about the first 5-10 years of autonomous cars being available. Beyond that, I won't even attempt to make any predictions. During this first decade, most cars on the roads will still be human-driven. I don't see the insurance end-user cost being decreased much for the autonomy-capable car owners. If anything, I see it costing more during the very first years until there's more statistics & operational experience. So even if there's some price reduction during the later years of the first decade, I think it will probably only even out with the initial premium, at best. As for new overhead costs, I guess during the initial years there could be a learning period of how to handle crash drama where the car owners don't agree as easily to what happened and who's at fault. Those same first years the A.I. will probably be pretty buggy as well, with some surprising crashes. However I think the insurance companies will account for these new overheads and raise the price accordingly. Overall, I don't think investing in car insurance is a goldmine opportunity. I do think that they will continue to make nice profits and definitely shouldn't be sold short. At least not for the reason of autonomous cars by themselves, maybe sell short a selection of companies whose management you think will be unable to adapt.