Musings from the CU Suite

Written by Anthony Demangone

By now, you've likely seen stories (NYT) about Google's prototype "driverless" cars. 

Photo by Google.

With no breaks or steering wheel, my first thought was that the car seemed a bit...silly.

But then I read this article, which highlighted how Warren Buffet viewed the driverless car.

Buffett’s company, Berkshire Hathaway, owns the massive auto insurer Geico. If self-driving cars take off, Geico and its competitors could easily take a hit, Buffett says.

“That is a real threat to the auto insurance industry,” Buffett said at his company’s annual meeting here Saturday. “If [self-driving cars] prove successful and reduce accidents dramatically, it will be very good for society and very bad for auto insurers.”

Self-driving cars use video cameras, radar sensors, lasers and 3D mapping technology to navigate the road ahead. Google has positioned them as a way to reduce by half the 1.2 million lives lost every year in traffic accidents. Yet insurers fear a reduced rate of collisions could lead to lower premiums, ultimately hurting their bottom lines.

Still, Buffett said autonomous cars would not cause him to think "for one second" of selling Geico, which he repeatedly praised at the meeting. He and his longtime investing partner, Charlie Munger, also questioned how long it would take for driverless cars to gain mass appeal.

Other question whether the driverless cars could change the way Americans think about owning cars in urban areas. Could you rent these cars by the hour, thus reducing demand for Americans to purchase cars?

Where is this all going? It is hard to say.  But with so many things tied to automobiles in our industry (loans, insurance, warranties), any disruption is sure to ripple through credit unions. 

Interesting times, eh?

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NAFCU Members: I had a wonderful time speaking at a NAFCU member credit union's strategic planning session yesterday. If you'd like a NAFCU employee to brief your board or staff on what is happening in D.C., please let me know. We can do so remotely, or in person (time and travel permitting).  We'd be happy to do so.