Autonomous Vehicles Implications on Insurance – Munich Re
Article Synopsis :
Autonomous vehicles (AV) are coming. “Autonomous Vehicles: Implications on Insurance” by MunichRe’s Scott Reeves takes an educated stab at the potential implications of AV on insurance premiums, both in dollar terms and distribution of coverages.
Many vehicle manufacturing companies have started their plans for launching AV in the near future. Notable success stories include Delphi and Google driverless cars. However, AV development still has a long way to go with mainstream uptake expected beyond 2020.
AV will impact insurers in more ways than one. Celent, for example, predicts as much as a 60% reduction in US auto premiums by 2030 as a massive reduction in accident frequency will preclude insurers from being able to charge meaningful premiums. Another impact, as AV promotes a sharing economy, is the number of cars on the road will shrink, perhaps radically. On the upside, cyber risk, products liability, and equipment breakdown/product-recall coverages related to private autos will almost certainly increase.
Much of what we know today as personal driver liability will become commercial product liability, so it’s possible the premium portfolios of insurers won’t suffer dramatically as this transition occurs. Key aspects related to liability include:
- Continued coverage through policies, with strict liability also applying to driverless robotic vehicles.
- Will autonomous functionality lead to an increase in the manufacturer’s liability?
- Insurers must retain the right to seek recourse from manufacturers.
- In the US, where coverage levels are often lower, the focus on product liability is likely to be greater in future.
- Newer responsibilities will emerge for manufacturers, suppliers, and third parties under product liability laws.
- Besides humans (i.e., drivers) and machines (e.g. cars and device manufacturers) who else may be ultimately responsible (e.g. third parties such as mapping vendors)?
Other considerations include:
- AV will drive new risk assessment methods highly technical in nature, placing unique demands on insurers and reinsurers
- AV places new demands on product insurance in terms of complexity of establishing fault, government budget pressure and care/indemnity balance
- Partnering with customers, manufacturers, and technology developers (telematics, telecommunications) is increasingly important
- In the US, where coverage levels are often lower, the focus on product liability is likely to escalate faster than other geographies
- Self-driving cars and ride-sharing programs will be more disruptive over the long-term in ways beyond lower accident frequencies and changing coverages. Today a personal auto is non-utilized 95% of the time. As AV takes hold and utilization rates increase car ownership will shrink, perhaps radically.
Link to Full Article:: click here
Digital Insurer's CommentsAV technology is evolving faster than the AV market itself. This report predicts – and we agree – that significant utilization (and disruption) will not hit until beyond 2020.
Today you drive your car to work and park it. Imagine the following scenario: Your car drives you to work and either drives home, or to some remote location where parking is free, or possibly rents itself out as a cab, until it comes to pick you up later in the day. Sounds futuristic but it’s coming.
Insurers must be prepared to adjust and innovate. Forging partnerships with customers, manufacturers, and technology developers is key to staying atop this market as it changes.
Link to Source:: click here