When it comes to assigning blame, few traffic accidents are clear-cut cases. Cars are getting smarter, drivers are turning into passengers, and we’re left with the many questions. How will the insurance industry evolve to manage the risk of self-driving cars and what will this mean for businesses and individuals?
The insurance industry is about to undergo a major transformation and car insurance is at the center of this change.
Home insurance, health insurance, insurance for your business if you think about it there isn’t an industry the insurance industry doesn’t touch in some way. It wasn’t my fault, honest: Insuring next-generation vehicles a panel during SHIFT Automotive through their discussion we heard 5 ways insurance will change because of the self driving car.
1. Individual insurance rates will decrease
The point of self-driving cars is to make the roads safer, as accidents decrease the need for insurance payouts will decrease and our rates will follow suit.
we don’t need to wait for fully autonomous cars to hit the streets to see a reduction in accidents. Advanced driver assistance systems (ADAS) are becoming commonplace, and they show significant potential to decrease crashes.
ADAS will become increasingly common as the technology becomes less expensive and older vehicles are replaced. By 2025, as many as 40% of cars may have systems such as lane change alerts and forward collision prevention.
Many insurers already offer premium discounts for these features, but as the effects of increased safety become apparent, insurers will need to lower premiums or risk being undercut by competitors.
Rates will be weighted more to the risk profile of the vehicle than the risk profile of the driver, which is the reverse of what we see today
2. Digital Twins Will Infiltrate Insurance platforms
A digital twin is a highly complex virtual model that is the exact counterpart (or twin) of a physical thing. Many companies already have digital twins for all the trucks in their fleet and machines on their assembly line to predict when they fail. This trend will continue but the insurance companies may make it mandatory or become involved in the monitoring process.
Insurance is all about analyzing risk and if you have sensors in the things you’re insuring and can predict when they’ll break down, it seems natural you’d want digital twins of everything!
3. Infrastructure insurance will emerge a dominant trend
Cloud server systems, signals, and other safeguards that will be put in place to protect riders and drivers. The need to secure and insure the public infrastructure, but governments often “self-insure” these risks so the opportunity for commercial insurance is likely to be lower.
4. Product liability will become a focus for insurance companies
Auto-related sensors and chips are expensive, but the real risk for manufacturers is the potential for failure through software bugs, memory overflow, and algorithm defects, and the resulting massive liability.
5. Automakers will assume liability for self-driving cars
When a self-driving car has an accident and a human driver isn’t in control, the manufacturer has stepped up to assume liability. Just so you’re clear if you’re behind the wheel and there is an accident you’re going to need your own insurance. Google, Volvo, and Mercedes-Benz will accept liability in cases where a vehicle’s self-driving system is at fault for a crash.
Since there are no self-driving cars on the road, this is currently all talk, so we should expect a lot of lawsuits before precedents are set. Insurance companies may need to step in and require extra tracking sensors to be placed in cars to determine whether a human or AI driver was at fault in an accident before automakers will assume full liability for crashes.
6. Automotive manufacturers become the insurance providers.
Why outsource a business when you can bring it in-house, we may see the acquisition or merger or insurance companies with the manufactures.
After all why partner with a lucrative business when you could just own it?
Insurance wasn’t the only talk at SHIFT Automotive that got us thinking about the future of the industry and how all industries will be affected by the ways that information and the people who use it move through the world.