Can Warren Buffett’s GEICO Lose Out Due To The Driverless Cars?

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By Jacob Maslow

electric car charging on streetDriverless cars currently seem like novelties. After all, if you’ve seen a driverless car model, they look quite hideous. They look like something a four-year-old assembled with a Lego set. That’s how clunky they look. However, if you look past appearances, there’s a lot to be hopeful for. Driverless cars use all sorts of external signals collected by an onboard computer to steer your car at the proper speed and position your car properly to minimize accidents, and also, make your trip more efficient.

If this ever catches on, and that’s a big “if,” this can spell major trouble for insurance companies. Why? If driverless cars live up to the hype and they end up minimizing car accidents, either on the road or while parking, they can put a lot of downward pressure on insurers’ stocks. Since insurance rates are based on the likelihood of accidents, the mere fact that a driver is using a driverless car can reduce premiums. A downward pressure on premiums plus the overall competitive nature of the American auto insurance industry can push a lot of the giant premium auto insurance outfits off a cliff.

GEICO is one of those premium insurers on the market. It’s a prime brand. Considering the fact that in most cases, there are a lot of no-name insurance providers, if consumers feel that their chances of ever getting into an accident are close to zero due to the fact that they’re riding a driverless car, there might be a market shift. More and more consumers might question having to pay top premiums for big names like GEICO and flood no-name insurers. This can result in a massive exodus from GEICO and similar insurers.

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