Self-driving car data prompts new insurance products
CompanyAutonomous Driving Outlook
In Action Summary
Autonomous cars will usher in a new era of demands and expectations from the insurance industry. Soon accidents due to speeding, texting and drink driving will be dramatically lowered as autonomous vehicle technology evolves.
If motor insurance companies want to survive then they will have to adapt to the changing technology. Especially when companies like Google and Tesla inevitably enter the auto insurance space in pursuit of revenue.
According to Celent, by 2025, the number of cars with advanced driver assistance systems (ADAS) including adaptive cruise control, steering pattern monitoring, automatic braking, blind-spot detection and driver drowsiness detection, is expected to jump to 40% from 15% in 2015. By 2030, half of all operational vehicles are expected to have multiple ADAS functions. Swiss Re predicts that ADAS could reduce crashes by up to 45% by 2020. Of course, reduced crashes means reduced risk, which in turn means lower auto insurance premiums.
ADAS play a vital role in limiting the damage/injuries caused to the driver, passengers, and pedestrians in the event of a crash/accident
However, the fact that the cars equipped with multiple ADAS are expensive to repair the likelihood of increased claim severity in case of cyberattacks is increased as autonomous cars will be controlled by programs and algorithms. The risk of catastrophic accidents is very real.
One of the areas where insurers need to adapt are policy pricing methodology which should be well supported with data and analytics. Additionally, the use of telematics will help in data aggregation, which can be used to innovate new products and services such as pay-per-mile insurance.
With increased focus on telematics and big data investments, insurance coverage focus will shift away from individual consumers or self-driving passengers, and toward Original Equipment Manufacturers (OEMs), fleet services and software developers.
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