By Kyle Steenland, Staff Writer
We have all heard the saying that driving is a privilege and not a right — a privilege regulated by states and dictated by cost. These regulations take many forms across the nation. There exists one commonality, however: legally mandated automotive insurance. With these laws come costs directly correlated to consumers’ driving proficiency and accident rates.
With the advent of the autonomous vehicle and an industry that boasts of the potentiality of an accident-free future, what role will these mandatory laws play?[1] Could insurance companies forcefully encourage consumers to purchase autonomous vehicles and inadvertently usher in an era of de facto mandatory ownership?
In the early 20th century, the car industry had two landmark events occur within a few years of each other. The first was the inception of mandatory insurance coverage laws in Massachusetts in the late 1920s. Although nearly 30 years ahead of its time, this type of policy would soon be adopted by all states, except New Hampshire, to some degree or another. The second was the 1930 Supreme Court of Virginia case Thompson v. Smith, which established that although citizens have the right to utilize highways to travel, the states have a larger right to regulate them in the name of public safety.[2] It is this right that nearly every state has exercised when creating its own compulsory automotive insurance regulations.
This all paved the way for an industry with revenues reaching nearly $228 billion annually and with over 220,000 employees across the nation — in addition to leading to the creation of numerous laws throughout the country.[3] Safety has often been the proclaimed aim of each state’s legislative body. Yet, an even safer alternative has recently emerged in the form of driverless vehicles that boast the potential for an accident-free driving experience.[4]
This possibility first emerged in 1984 with a computer-controlled Jeep Wrangler in Western Pennsylvania, and has now evolved into more stylish and futuristic vehicles that boast of self-driving capabilities.[5] Assimilation of such vehicles will take time. Some forecast that by 2020, there will be nearly 10 million self-driving cars on the road; insurance companies could play a significant role in forcing consumers to buy these vehicles.[6]
With compulsory insurance laws already in effect, insurers may naturally want their policyholders to purchase vehicles that are virtually guaranteed not to have accidents. This, in turn, would reduce the number of payouts the company would have to make. As a result, insurance companies would face immense pressure by their operating bodies to encourage individuals to adopt autonomous driving lifestyles. This could be achieved by modulating the consumers’ policies and the costs of their premiums.
All of this would ultimately depend on an individual’s financial situation. In evaluating the impact of such a policy, let us examine the average Allegheny County civilian to try to determine how much influence such a policy change could have.
In 2014, the average Allegheny County household was comprised of 2.26 persons.[7] Rounding to two, this equates to either a household of one adult and one child or two adults. Assuming a consistent 40-hour workweek, this yields an average income of either $45,420 with one working adult or $90,940 with two.[8] (It should be noted, however, that the unemployment rate is 4.1 percent in Allegheny County, and these figures only take into account the income of employed individuals.[9])
With an average cost of living of $42,950 for one adult and one child, or $33,263 for two adults, this leaves an average disposable income of either $2,470 or $57,577.[10] Although a stark disparity in savings between the two, it should be noted that the latter demographic represents only 29.1 percent of individuals.[11] Additionally, the average consumer pays $841.42 annually for coverage.[12] Although that is already accounted for in the statistics, this amount could be increased by any reasonable percentage and still be devastating to a single-parent household.
Although this is all likely in the distant future, in the present, it is no longer unreasonable to expect that traffic accidents will one day amount to nothing more than antiquated inconveniences. In that future, ideally, regulations that compel consumers to purchase automotive insurance will cease to exist the moment traffic accidents are no longer a reality. Unfortunately, it is highly possible that these regulations will take time to phase out, and it will be during that transitional period that consumers will be obligated to pay for a service they no longer require — a service once necessary in the generation of yesteryear.
Sources
[1] https://www.mercedes-benz.com/en/mercedes-benz/innovation/mercedes-benz-on-the-way-to-autonomous-and-accident-free-driving/
[2] Thompson v. Smith, 155 Va. 367, 154 S.E. 579 (1930)
[3] http://www.ibisworld.com/industry/automobile-insurance.html
[4] https://www.google.com/selfdrivingcar/
[5] http://www.cs.cmu.edu/afs/cs/project/alv/www/index.html
[6] http://www.businessinsider.com/report-10-million-self-driving-cars-will-be-on-the-road-by-2020-2015-5-6
[7] http://www.census.gov/quickfacts/table/PST045215/42003
[8] http://www.bls.gov/oes/2014/may/oes_38300.htm#otherlinks
[9] http://www.bls.gov/regions/mid-atlantic/news-release/2015/pdf/unemployment_pittsburgh_20150219.pdf
[10] http://livingwage.mit.edu/counties/42003
