The Wall Street Journal reported last week that the reality of driverless cars on the public roadways is now being recognized as a business risk in some corporate filings. According to the WSJ piece, three insurers and an auto parts firm have listed driverless cars as a risk factor for their future business. Granted, the “risk factors” section of corporate filings is a laundry list of cover-your-backside investor disclosures so that if/when a publicly traded company’s stock price tanks the firm’s management and directors can point to the filing and say, “See, we told you this might happen, so don’t blame us.”
It’s interesting to me that the insurers are flagging driverless cars as a potential business risk due to the possibility that such cars might actually reduce the number and severity of accidents, and reduce the demand for insurance products. Uh, what? As long as there are fast-moving hunks of metal and mass chugging down roadways, there will be a need for insurance. But what if driverless cars actually reduce the number of accidents, injuries, and property damage? Isn’t that what the insurance industry has been wanting to do all along?
I wrote about driverless cars a few months ago, and raised several questions that remain unanswered. I’m sure that these and many other areas of uncertainty underlie the insurers desire to include driverless cars as a potential business risk. We always fear the unknown. Peter Drucker, in Managing in the Next Society, wrote:
“If you start out by looking at change as threat, you will never innovate. Don’t dismiss something because this is not what you had planned. The unexpected is often the best source of innovation.”
I don’t necessarily think that all insurers are viewing driverless cars as a threat, just because they list it as a potential business risk in their mandatory corporate filings. More likely, it’s an acknowledgement that there will be some volatility brought about by such a major innovation. As the WSJ article points out and my previous blog entry alluded to, when driverless cars are involved in accidents the insurance burden may shift from the personal auto insurance policy to the manufacturer’s commercial general liability policy because the “at fault” aspect of the accident may have more to do with the software than the person sitting inside the car. Still, not knowing how all of this will shake out and affect the insurance premiums and claim payouts most certainly is beginning to enter the stream of consciousness in the insurer board rooms and management suites.