Drivers have been taking auto insurance policies since the world was put on wheels decades ago, but as we’re seeing, rapid development of autonomous vehicles is poised to flip many industries upside down. Insurance companies aren’t excluded in the autonomous revolution.
Business Insider reports Warren Buffett issued a statement on the rise of driverless vehicles, and he cautioned auto insurers during Berkshire Hathaway’s annual meeting.
“If they make the world safer it’s going to be a very good thing, but it won’t be a good thing for auto insurers,” Buffett said.
Although he personally believes widespread adoption of driverless cars won’t be a reality for quite some time, it’s a threat insurance companies should take seriously. Driverless cars are obviously engineered and designed to operate accident-free. Without claims, auto insurers would have no choice but to lower premiums.
“If driverless cars became pervasive it would only be because they were safer,” he said. “That would mean that the overall economic cost of auto-related losses had gone down and that would drive down the premiums.” Berkshire Hathaway has its own stake in the auto insurance industry with Geico, a wholly owned subsidiary.
Many automakers predict autonomous vehicles will be deployed sooner rather than later, likely in a fleet of car or ride sharing services. General Motors continues to let Cruise Automation take the lead on its self-driving vehicle programs, overseeing the subsidiary like a start-up operation.