The future of car insurance: car insurance in 2022
The past few years have been very strange for Canadians, due to the pandemic, economic disruptions, and unusual weather conditions. Suffice it to say, we've all had to adapt in one way or another, whether it's working from home, driving less, or living virtually. Ultimately, the pandemic has brought about many changes, including in the world of auto insurance.
How did car insurance change in 2020 and 2021? When the pandemic began, there were so few drivers on the road, and consequently so few claims, that insurance companies were incentivized to send refunds to their customers. Due to stay-at-home orders, many families and individuals had less or no need to travel at all.
Now that 2022 is on the horizon, what does the new year hold for car insurance? Will rates continue to rise? How will the pandemic affect our coverage? Read on to find out.
Rates are expected to peak (eventually) in 2022.
Insurers all calculate risk differently, which is partly why you can't expect car insurance to cost the same across all companies. Some companies offer different discounts. Based on current data, car insurance rates are expected to continue rising slightly before leveling off later in the new year. It's worth noting that two important factors, which could remain relevant for some time, are inflation and ongoing supply chain issues. If you have an older vehicle, you can expect your insurance rates to remain relatively stable, as parts are much easier to source and, in the event of an accident, easier to replace.
What will be the impact of automated vehicles on insurance?
The future of driving is driverless. As vehicles become increasingly automated, with largely automated vehicles now appearing on Canadian roads, it is necessary to update laws—and change how insurance works—to ensure that anyone involved in a collision or accident receives fair compensation as quickly as possible. Furthermore, it appears that our vehicle safety standards must be revised to reflect a greater reliance on automated technology.
Currently, insurance is designed so that human error is the primary cause of accidents. It is estimated that approximately 95% or more of accidents can be attributed to human error. However, as vehicles become more autonomous, collisions will largely be attributable to product malfunctions. Ideally, this will reduce the risk of accidents and collisions. Yet, when accidents do occur, the way insurance works needs to change—specifically, how injured individuals file product liability lawsuits to receive fair compensation. The way product liability litigation operates today could result in significantly longer waiting times for compensation for those injured while driving automated vehicles or who are injured in accidents involving automated vehicles. What needs to change?
We are far from fully automated vehicles, but we could begin to see completely driverless cars within the next ten years. Insurance may need to be modified to account for this, which could mean adapting a single policy that covers both automated technology and driver negligence to expedite liability claims. Furthermore, a data-sharing agreement between vehicle owners (or insurers) and vehicle manufacturers may be necessary to make it easier to determine the cause of an accident or collision.
Ultimately, insurers will need to change how they perceive risk to adapt to how driverless vehicles are used on public roads. It is hoped that the shift to autonomous vehicles will significantly reduce the number of collisions and accidents on public roads, lower accident fatality rates, and keep us all much safer while traveling from point A to point B.