PhotoCar insurance companies are worried about self-driving cars -- and it's not because they're afraid the self-drivers will cause more accidents. Quite the opposite. They're worried about the long-term effect on the insurance industry if autonomous cars turn out to be as safe as everyone expects.

Sure, insurers will be rolling in extra cash for a few years if self-driving cars cause a sharp reduction in accidents. But over the longer term, what would that mean for the insurance industry?

The answer is pretty obvious: if the accident rate declines and stays low, insurers will be under severe pressure to lower their premiums. 

Raises questions

“Widespread adoption of self-driving cars is still decades off, but it raises questions of what an auto insurer’s role will be in a world with far fewer accidents,” Moody's analyst Jasper Cooper said in a statement quoted by Automotive News. “Regulators, lawmakers and courts will have to determine how liabilities are shared among insurers, automobile manufactures and technology companies.”

Even before the transition to autonomous cars is complete, safety features like automatic braking and lane departure prevention are likely to reduce accidents markedly. Any savings could be counter-balanced, though, by the higher cost of repairing today's more complicated vehicles.

Cooper doesn't expect auto insurance to go away completely. There will still be accidents caused by mechanical failures, storms, and the occasional driver who insists on using manual controls. 

Also, if ride-sharing increases as expected, the market for commercial insurance could grow, he said.

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