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Comment by harikb | Hacker News Reader

History suggests it won't be that clean.

1. High-severity accidents might drop, but the industry bleeds money on high-frequency, low-speed incidents (parking lots, neighborhood scrapes). Autonomy has diminishing returns here; it doesn't magically prevent the chaos of mixed-use environments.

2. Insurance is a capital management game. We’ll likely see a tech company try this, fail to cover a catastrophic liability due to lack of reserves, and trigger a massive backlash.

It reminds me of early internet optimism: we thought connectivity would make truth impossible to hide. Instead, we got the opposite. Tech rarely solves complex markets linearly.

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> Insurance is a capital management game. We’ll likely see a tech company try this, fail to cover a catastrophic liability due to lack of reserves, and trigger a massive backlash.

Google, AFAIK the only company with cars that are actually autonomous, has US$98 Billion in cash.

It'd have to be a hell of an accident to put a dent in that.

They know it’s cheaper to buy/lobby congress to limit their liability and will do so long before they payout real money.

They'd still at least buy reinsurance etc anyway.

All unlimited liability insurance companies (e.g. motor insurers in the UK) have reinsurance to take the hit on claims over a certain level - e.g. 100k, 1m etc.

For extreme black swan risks, this is how you prevent the insurance company just going bankrupt.

Reinsurers themselves then also have their own reinsurance, and so on. The interesting thing is that you then have to keep track of the chain of reinsurers to make sure they don't turn out to be insuring themselves in a big loop. A "retrocession spiral" could take out many of the companies involved at the same time, e.g. the LMX spiral.

I believe google/waymo uses Swiss Re for reinsurance, so you are correct.

The provider of the insurance can always insure itself for that catastrophic case. It's called Reinsurance.

If it's cheaper for them to pay lawyers a few tens or hundreds of millions to bury any such case in court, in settlements, or putting the agitator through any of the myriad forms of living hell they can legally get away with, then they'll go that route.

You'd need an immensely rich or influential opponent to decide they wanted to march through hell in order to hold Google's feet to the fire. It'd have to be something deeply personal and they probably have things structured to limit any potential liability to a couple hundred million. They'll never be held to account for anything that goes seriously wrong.

This is a crazy take. Google has lots of money to hire lawyers, but that also means that Google has lots of money to pay out settlements. It's worth it to sue them because they have something to take.

Getting richer has never made someone LESS likely to be assured.

Auto insurers don't face a "catastrophic liability" bankrupting scenario like home insurers might in the case of a natural disaster or fire.

A bad hail storm comes close. Hail damage can total a car.

Cars are the cheap part of auto insurance claims.

Exactly this; damaging a building or causing the death of a person can be 10x+ more costly for the insurer.

Only when you are looking at one claim. If all the cars in a city get hail damage the total costs exceed the typical daily claim losses.

I think the point is that it’s much less than all the cars.

And a hailstorm that knocks out 10,000 cars is very rare. But hurricanes or fires that knock out billions in homes happen almost every year.

Euro importers love hail damaged Copart cars, very cheap to fix here.

Would auto insurers have enough insured cars within the area of a hailstorm to matter though?

This is why insurance companies pay cloud seeders to move thunderstorms and reduce the probability of massive hail claims.

This is true, we had a bad hail storm come through in 2010 that dimpled an appreciable fraction of the cars in the city like golf balls. Most were deemed repairable write-offs. Went right over a couple of luxury car yards. A bunch of people at my work moved our cars undercover 10 minutes before it hit, and felt kind of silly… for 10 minutes, until it hit.

Car insurance premiums jumped by quite a lot that day, as far as I can tell permanently.

I can easily imagine auto insurers facing exactly that kind of liability if a self-driving car release is bad enough.

> Auto insurers don't face a "catastrophic liability" bankrupting scenario like home insurers might in the case of a natural disaster or fire.

This changes with self-driving. Push a buggy update and potentially all the same model cars could crash on the same day.

This is not a threat model regular car insurers need to deal with since it'll never happen that all of their customers decide to drive drunk the same day, but that's effectively what a buggy software update would be like.

Far be it from me to tell automakers how to roll out software but I would expect them to have relatively slow and gradual rollouts, segmented by region and environment (e.g., Phoenix might be first while downtown London might be last).

Tesla certainly does it this way today. This is also the norm for IoT that I'm aware of. Nobody wants fleet-wide flag days anyway.

> Nobody wants fleet-wide flag days anyway.

Crowdstike raises their hand..

aionescu, CTIO of CrowdStrike, is here.

That process itself could still break. (Unlikely though it may be)

I think you’re right, but this thread did bring to mind the LA Northridge quake (1994):

https://scpr.brightspotcdn.com/dims4/default/a553905/2147483...

I doubt autonomous car makers will offer this themselves. They'll either partner with existing insurers or try to build a separate insurance provider of their own which does this.

My guess, if this actually plays out, is that existing insurers will create a special autonomy product that will modify rates to reflect differences in risk from standard driving, and autonomy subscriptions will offer those in a bundle.

Bundling a real product with a financial institution is a time tested strategy.

Airlines with their credit cards are basically banks that happen to fly planes. Starbucks' mobile app is a bank that happens to sell coffee. Auto companies have long had financing arms; if anything, providing insurance on top of a lease is the natural extension of that.

> Auto companies have long had financing arms

I have in fact heard it said that VW group is a financing company with a automobile arm. From some points of view, that seems correct.

Auto companies, yes. As I understand it, airline credit cards are mostly just co-branded cards with existing banks like Chase.

Frequent flyer programs are basically banks if you consider miles/points are currency.

That's different from the credit cards themselves--given the points degrade in value. (And which I should really start to use more.)

> High-severity accidents might drop, but the industry bleeds money on high-frequency, low-speed incidents (parking lots, neighborhood scrapes). Autonomy has diminishing returns here; it doesn't magically prevent the chaos of mixed-use environments.

This seems like it can be solved with a deductible.

I think parent might be implying that a 10 mph collision can total a car just as effectively as a 100 mph collision. There might be more left of the occupants, but the car itself might be still a total loss from a cost-to-repair perspective

True, but another thought I would have is these modern cars should have sufficient sensors to be able to stop and avoid collisions at low speed.

> Autonomy has diminishing returns here; it doesn't magically prevent the chaos of mixed-use environments.

It doesn't prevent chaos, but it does provide ubiquitous cameras. That will be used against people.

I'm ambivalent about that and mostly in a negative direction. On the one hand, I'd very much love to see people who cause accidents have their insurance go through the roof.

On the other hand, the insurance companies will force self-driving on everybody through massive insurance rate increases for manual driving. Given that we do not have protections against companies that can make you a Digital Non-Person with a click of a mouse, I have significant problems with that.

Yes, imagine you bought a Google self-driving car for $70,000, and one day their algorithm gets mad at you due to a glitch, and your Google account is locked, your car can no longer be unlocked, can't be sold, and your appeals are instantly rejected and you have no recourse. Just a typical day in Google's world.

> I'd very much love to see people who cause accidents have their insurance go through the roof.

Life is hard and people make mistakes. Let the actuaries do their job, but causing an accident is not a moral failure, except in cases like drunk driving, where we have actual criminal liability already.

> the insurance companies will force self-driving on everybody through massive insurance rate increases for manual driving.

Why would manual driving be more expensive to insure in the future? The same risks exist today, at today's rates, but with the benefit that over time the other cars will get harder to hit, reducing the rate of accidents even for humans (kinda like herd immunity).

> Given that we do not have protections against companies that can make you a Digital Non-Person with a click of a mouse, I have significant problems with that.

I absolutely think this is going to be one of the greater social issues of the next generation.

>Why would manual driving be more expensive to insure in the future? The same risks exist today, at today's rates, but with the benefit that over time the other cars will get harder to hit, reducing the rate of accidents even for humans (kinda like herd immunity).

I think it will get cheaper because people who want to do risky things that detract from driving will self select to drive autonomous vehicles.

Interesting theory, I would have assumed the exact opposite. People who want to drive fast and take risks will select manual driving because they'll find the autonomous cars too boring.

It's a numbers game. Those people basically don't exist compared to cheapskates who want to drive old cars and people who crash cars driving distracted. It's gonna come down to how many people who want to text and drive or do other sketchy stuff want to make the jump to autonomous cars. Classic car insurance is already stupid cheap just because it implicitly excluded a bunch of risky demographics.

I hope this forces insurance companies to deal with the lenient driver licensing problem that the government refuses to deal with

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