Google’s announcement earlier this year that it would accept liability for injuries or damages caused by design flaws or faulty components in its autonomous vehicles is a move one industry insider says “nobody noticed,” but should be considered a giant red flag to brokers.
“They’re trying to demonstrate confidence in their product, which is great,” said Blake Corbet, managing director at PI Financial Corporation. “But knowing what I know about Google, I immediately assumed this a way for it to get into the insurance business.”
Many analysts have commended the tech giant for willingness to take on risks accompanying emerging technology. Some, however, like Corbet, have pointed out this could be a “Trojan Horse.”
Corbet argues, Google’s launch of an insurance-comparison site earlier this year indicates its intention to move into the P&C insurance market. He feels driverless cars are the perfect launching point for Google to become a coverage provider.
This would be a particularly strategic plan. The nature of autonomous vehicles allows their auto insurers to operate with a higher profit margin than traditional insurers can.
It’s unlikely Google will be as concerned about claims as traditional P&C insurers are. So far, all its driverless car collisions were the fault of human drivers – a statistic verifiable by video and data sensors.
This impeccable driving record, combined with the fact that Google could potentially mass produce these cars, has striking ramifications for the insurance industry.
“They’re effectively insuring the best cars on the road, the cars which they also design and manufacture,” Corbet said. “When they sell these cars or provide them to a distribution network, they can presumably require the purchaser to bundle insurance with the cost of the car.”
This also has the potential to create a two-tiered insurance market.
“Google can presumably charge lower insurance rates for their cars, and higher insurance rates to the vehicles that are driven by humans, since we’re not good drivers,” Corbet said.
The shift to driverless cars will undoubtedly affect the broker and agent role – but there will still be a need for niche advisers. In addition, in a sharing economy where autonomous vehicles only serve to pick up and drop o‑ customers (similar to a driverless Uber), Americans will still have insurance needs.
“Industries adapt, and there’s probably an angle here for people to have their own personal insurance. What happens when you leave personal belongings in the vehicle, for example?,” Corbet said.
Corbet feels it’s a waiting game to see how insurance evolves for meeting consumer demand.
