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Will we always need car insurance?

According to annual statistics recently published by the Association of British Insurers (ABI), more than £17 million is paid out by British insurers every day of the year. This equates to settlement of around 3 million claims daily.

This very substantial sum is of course paid for by the very motorists who are required by law to have insurance in order to drive their cars on the roads or in any other public space. In a related report in early February of 2015, the ABI also revealed that the cost of the average motor insurance policy last year fell by 4%.

A continuing trend?

If the cost of motor insurance is beginning to come down, is there any prospect of this trend being continued through the widespread use of driverless cars, so that eventually we require no car insurance at all?

If cars no longer need drivers, then drivers no longer need insurance runs an apparently logical argument.

According to research in the United States, for instance, 90% of road traffic accidents are caused in one way or another by driver error – if advances in automotive technology means that the need for a driver is eliminated, that may support the argument that the need for car insurance might also go the same way.


Here at GSI Insurance we are taking a generally more realistic view.

Technology is already helping to make life on the roads safer. Collison hazard alerts and lane departure warnings, for example, are already available and installed in some cars. Although it remains probably too early to say definitively how many accidents such technology may have averted, the introduction of more and even better safety devices may contribute to a marked reduction in accidents – and therefore insurance claims.

The eventual situation where driverless cars are the norm and road safety is given over entirely – or almost entirely – to technology might even make on-road accidents a thing of the past.

With less needs for motor repairs, fewer injured drivers and reduced demand for spare parts and breakdown assistance, losses to the insurance industry may expect to be considerably lower and premiums, therefore, to become much lower too.

So much is a question of perspective, however, and the ceiling is set pretty high. A £17 million a day habit is likely to prove difficult to break and reductions in the daily cost of insurance claims are likely to come only over time – and potentially quite a long time. There is unlikely to be any early disappearance of the need for car insurance therefore.

Moreover, even in that utopian future where accidents between driverless cars may have become a virtual impossibility, there may still be a need for forms of motor insurance.

For so long as humans – real people with all the capacity for mistakes and errors – choose to own motor cars, there is likely to be a need for some form of public liability insurance. The owner of the car is going to continue to have a duty of care towards other road users and members of the public. If there is a breach of that duty, the owner is likely to continue to look – just as at present – to the motor insurer for indemnity.

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