In the 1989 film “Back to the Future Part II,” young Marty McFly traveled forward through time (using the ever-reliable flux capacitor) to the year 2015. Some of the film’s predictions about the future (flat- screen TVs, biometrics, drones, and holograms) were spot-on, while others (flying cars, hovering skateboards, and a Cubs World Series victory) perhaps not so much. The film also more or less missed the emergence of some of the really transformative technologies of the last three decades, such as the Internet and the smartphone.
The hit-or-miss nature of scientific and technological prognostication is worth keeping in mind, whether the people doing the prognostication are filmmakers, city planners or business strategists. It is extremely difficult to predict when (or even if) a particular technology will take root, and even more difficult to predict how long it will take for the general public to adopt it.
As we have noted previously, some property and casualty insurers have begun serious explorations of the implications for the automobile insurance market of the development of autonomous vehicles. Some have even begun to cite autonomous vehicles as a “risk factor” in their public filings. It is worth keeping in mind, however, that at this time there are exactly zero completely autonomous vehicles owned by private citizens.
The first privately owned automobiles in the US appeared in about 1890 and, for 20 years, internal combustion, electric and steam engines fought for market supremacy. Internal combustion engines did not really win out until about 1910 and the automobile did not completely replace the horse until about 1920.
Can we expect a similar 30-year transition period to the point of widespread acceptance and use of autonomous vehicles? No one really knows. Insurers should pay close attention to developments on this front, but they should also remain focused on the growth and profitability of the auto insurance business as it currently exists. That business will still be around for some time.