Driverless cars may drive self-insurance for tech companies

A lack of “disruptions” in the re/insurance industry has led to a slow uptake in technology, but factors such as driverless cars may be about to shake things up.

Adrian Guttridge, executive director, insurance, Xchanging, told Monte Carlo Today that as focus shifts from the car driver to the manufacturer, this could lead to the need for technology suppliers to self-insure.

“From a cyber perspective, imagine if Google licensed its software to several car manufacturers and someone managed to hack the on-board computers and get all cars to turn left at 11am on a Tuesday morning around the world. The size of the claim would be huge,” he said.

“But the big question would then be: would these companies self-insure?”

Guttridge said that, according to Bloomberg, large tech companies such as IBM, Apple and Microsoft increased their repatriated cash by $36 billion over one year.

“This is cash they’re holding offshore,” he said. “So, could they therefore self-insure against their insurance claims for their own software—yes they could. These companies would almost become insurance companies.”

Guttridge explained that regulation will play a key role in the introduction and use of driverless cars.

“Regulation tends to follow slowly behind, which is a concern. We’ve repeatedly seen examples of this—particularly with regard to self-certification of mortgages—so are governments thinking far enough ahead to make sure they know what’s coming?” he said.

“It might be a 10-year cycle until we actually see this, but I’ve not often seen a big disruptor come to the market and this could be it.”