US Edition 
Why bad driving will be eliminated by 2020 – and car insurance costs will plummet
Driverless cars could dominate British roads in just five years. If there are no accidents, will we even need car insurance?
Car insurance premiums could be just a fraction of current levels in five years’ time as driverless vehicles are expected to “eliminate bad driving” by 2020.
Deaths and injuries caused by accidents are expected to virtually disappear and whiplash claims and car park disputes, which together account for 94pc of all insurance claims and cost insurers almost £3bn a year, could become a thing of the past as driverless technology will park our cars, brake automatically and swerve to avoid pedestrians and cyclists.
The hi-tech cars that will bring about these dramatic improvements are expected to be introduced to Britain’s roads as early as 2018 to 2020, according to a gathering of industry experts held last week.
To find out what this means for your car insurance in the future, Telegraph Money looked at the findings from the annual British Insurance Brokers’ Association (Biba) conference in Manchester.
What does the technology do?
Driverless cars aim to eliminate human error on the roads, whether it’s dodgy parking, accidentally reversing into an object or person or straying into the wrong lane in a motorway.
Already a quarter of new cars, including Volvos and Mercedes, have driverless technology installed, which can take over the controls when parking, shake drivers in their seats if they drift into the wrong lane, or perform an emergency stop to prevent a collision.
Autonomous emergency brakes reduce accidents by up to 25pc, and 45pc in the best systems, according to Thatcham, which tests vehicle safety.
The most basic systems automatically kick in when you are driving at 10mph, meaning you won’t accidentally hit a car in front during a traffic jam, for example, while others can reduce the impact of high-speed crashes.
Insurers already offer a 10pc discount on cars with driverless technology, such as emergency braking systems, which typically cost between £300 and £1,000 to install.
But the technology is about to get more invasive. Cars could soon automatically take control if the driver is over the alcohol limit, for example, or is showing signs of being too sleepy to drive. Major carmakers are involved in this development, alongside technology firms such as Google.
Fully automated vehicles are expected to account for 90pc of cars on British roads within five years.
The change will “really begin” in 2018, said Matthew Avery, director of safety research at Thatcham, when carmakers Tesla and Mercedes plan to introduce automated driving to cities in Britain with vehicles that drive without your hands or your feet touching the controls.
According to predictions by KPMG, the consulting firm, self-driving vehicles will save more than 2,500 lives and prevent more than 25,000 serious accidents per year on Britain’s roads by 2030.
The report, commissioned by the Society of Motor Manufacturers & Traders (SMMT), predicted that motor premiums would fall as safety improves, accident data becomes more available, and liability shifts from drivers to manufacturers.
Who will be liable if a driverless car crashes?
Currently 71pc of all car insurance claims result from a vehicle reversing badly, and 23pc from parking incidents. Both are expected to be eliminated on roads with driverless cars.
Instead, “catastrophic crashes” – when a driverless car malfunctions – will account for most accidents, said Mr Avery.
Currently, motor insurance is priced on the basis that the driver is liable to pay for any damage they do to themselves or others. But if the car itself is to blame, manufacturers could be liable to foot the bill instead.
“It’s not yet certain who is liable when an accident occurs and the owner isn’t driving,” added Mike Hors of the SMMT.
This could be a matter for the courts to decide, said Mr Hors. “There will be test cases, possible legislation, there are lots of questions we have yet to answer.”
Brokers and insurers, however, insist that car insurance will always have a place as the industry will adapt to driverless vehicles.
Graeme Trudgill of Biba said: “Liability is a very interesting conundrum. If we eliminate accidents caused by human error, we could move towards a model where people pay much cheaper insurance rates as the cost is shifted towards ‘product liability’.
“However, if manufacturers are paying for the crashes that do occur, they will need to claw that cost back. This could be reflected in a higher cost for driverless cars.”
Could car insurance disappear?
Car cover won’t disappear entirely because we will still want insurance against fire, theft, damage from such things as fallen trees and so on. But cover for accidents of the type that should be eliminated by driverless technology.
This could halve the cost of car cover in just five years, according to John Leech, head of motor at KMPG. "Premiums could halve once we have vehicles which communicate with each other and an 'autopilot mode' when driving on the motorway – this is likely to happen approximately around 2020," he said.
Insurance priced by your driving habits
Currently, insurers work out premiums based on the driver’s profile, their claim history, car and location. So you may pay a higher price depending on your age or occupation, for example, regardless of how well you drive.
But this could be about to change. Cars of the future will automatically track and record driving data, meaning customers with a record of safe driving could negotiate a lower premium.
Already 323,000 British motorists have cars with “black box” technology that tracks driving data and report this information back to insurers. Most are younger drivers, who can save as much as £1,000 a year by opting for a “telematics” policy.
Mr Trudgill said the data should belong to customers for them to take to brokers, insurers and carmakers to get an insurance quote.
“It’s almost like a credit rating – the data should be easily accessible and understandable to customers, so that they can take this information to insurers and if they’re a good, safe driver get a discount.”
But this could open the door for a new type of insurance fraud, warned Neil Mercia, from Axa, the insurer. “If one customer gives me 20,000 miles of driving data and another customer gives me 500, is it fair that I, as an insurer, treat them in the same way?”
Data-sharing could potentially penalise customers who are honest with their driving habits, as bad drivers could “select the driving data they want to get a cheaper price at a cost to a more honest customer”, Mr Mercia said.
The first move towards an automated future will take place in October when all new cars will be fitted with technology that automatically calls the emergency services in the event of a crash.
New European rules will require all new cars to have the technology installed as standard. Then, by 2016, “black box” telematics will be installed in every new car.
What if I want to drive a classic car?
It won’t be possible to fit driverless technology to classic cars – and, in any case, enthusiasts may prefer to drive them normally.
As a result, we will always have a mixed fleet of cars on our roads, with the added danger that drivers may be less experienced when they do take occasionally take the wheel, said Mr Trudgill.
“If drivers in the future are used to semi-driverless cars, are they going to lose those skills when they start driving a classic car a few years later? We need to make sure driver testing is adequate whatever vehicle people are in,” he said.
Are driverless cars safe?
The in-car equipment can override motorists’ mistakes but a system error in a driverless car could have far worse consequences.
Google’s plans to eliminate human driving with new cars that communicate with each other, for example, have already been beset by 11 accidents during trials in California. None of them was serious or caused by Google, the technology firm claimed.
But the benefits are clearly expected to outweigh the risks.
• kate.palmer@telegraph.co.uk
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