Back in the 1990s, two insurers – Aviva and Progressive – started to look to automotive technology to get a leg up on competitors. Automobile manufacturers provided access to travel information as well as the health of the vehicle. After a few years of mediocre responses, Aviva dropped out and Progressive continued, albeit at a lower level.
Little did these pioneers realize that automobile manufacturers and insurers would be driving the next generation of automotive utilization within 20 years!
We are setting up a deep dive into the changes of vehicles and insurance at the 2019 Insurance-Canada Technology Conference. More on this below. If you are working on automotive coverage, or technology, you need to read more.
There are changes on the road ….
Writing in Insurance Business Canada, Bethan Moorcraft noted that there is a resurgence of interest in Telematics with insurers. She writes: “The race to lead innovation in autonomous vehicle technology is well and truly on – and it’s in the interests of auto insurers and brokers to keep on top of the trends.”
Rick Huckstep, a well know InsurTech leader, along with David Williams from AXA UK, recently published an article: Four Ways Autonomous Vehicles will Change Auto Insurance. He starts with an important data landscape (US Data):
- 1.25 million deaths worldwide due to vehicle crashes (as reported for 2014).
- The National Safety Council estimated approximately 40,000 American dies on the road in 2016, a 6% increase over the previous year.
- In the United States, 94% of crashes involve human error from speeding, alcohol, distraction or drowsiness.
With that sobering message, Huckstep and Williams note that the the major factors rest on humans. Moreover, autonomous vehicles could be an elegant solution, assuming that the right autonomy – defined by the Society for Automotive Engineers International (SAE) in 2014 – is used.
As you might know, there are 5 levels of autonomy. Levels 0-3 are NOT sufficient for autonomous utilization. Several automotive companies are showing that a level 3 vehicle can follow a car at a specific distance, and execute braking. This is cute, but NOT autonomous.
Levels 4 & 5 define conditions when the automated driving system is in control. Williams notes that in the UK, is leading the way going through parliament. There are regulations and a code of practice for testing.
What does this mean for auto insurance?
As the testing completes, technology will prove itself as better than humans in the driver seat. Testing has been underway. Yes, there have been accidents, but the good news is that the tech will only get better.
With that in mind, there are four impacts on insurance:
- There will be fewer claims, less fraud, and, ultimately, lower premiums. In the US, Some estimates predict a fall of 50% or more in the auto insurance premiums.
- Insurance liability will shift from the driver to the manufacturer. That said, auto manufacturers are not keen on taking that liability. This could require an overarching coverage until this settles down.
- Claims history and driving behaviour for drivers will become irrelevant. Williams said: “Insurers are going to have to develop a whole new set of skills and expertise in house .. This is not just a mechanical requirement but a technology one too.
- Manufacturers eliminate the need for insurance all together. This is an open discussion. Huckstep says that this is a long shot, but believes there will be changes, but it will shift liability to the vehicle from the driver.
Get ready for a deeper dive ….
Having sat through a number of presentations on next gen vehicles and utilization, attendees occasionally get a bit energized, especially if the presenters have little more than a high level view. We want to get you to the real meal deal.
At the 2019 Insurance-Canada Technology Conference (#ICTC2019), we have set up a deep-dive on telematics with changes, options, and means to survive (drivers, manufacturers, and insurers). We have:
- Catherine Kargas, Vice President, MARCON & Mobility Expert. Moderator
- John Elliott, SVP& CIO, RSA
- David McGown, SVP, Strategic Initiatives, Insurance Bureau of Canada
- Franck Bonny, Vice Presdient PMG Technologies
If you are working at all with automotive insurance or vehicle management, this is what you need to understand the previously unthinkable!
We look forward to seeing you there.