The Future of Autonomous Cars Using Insurance Technology
The topic of autonomous cars is something many people are discussing in the insurance sector. While professionals want to know what the future holds, it has been challenging to analyse with certainty.
Nevertheless, there are a few clues based on things happening around the world as to what's coming down the pipeline and how this may change lives in the not-too-distant future.
This article covers some of this research, with added theories and an examination into how it may impact the insurance industry over the long term.
The entertainment industry's influence on culture
If you've watched movies like 'I, Robot', 'Minority Report' or 'The Fate of the Furious', you'll know the idea of autonomous cars is nothing new. In these films, self-driving cars are used as an everyday mode of transportation, and people simply get in and go.
According to Vanarama, there's even an evolution of self-driving cars on the screen, starting as early as 1968 with 'The Love Bug':
Could manually driving cars be banned in the future?
Because the second most significant cause of avoidable fatalities in the world is automobile accidents, it's conceivable driving motor vehicles may be prohibited altogether in the future. Based on research from the World Health Organisation, around 1.3 million people die each year in road accidents, with most of these incidents attributed to human error.
This fact has led some futurists like Elon Musk to believe people might not be allowed to drive cars in the future. In a recent comment to Wired, he said, "People may outlaw driving cars because it's too dangerous."
While it's possible manual driving may eventually be banned, this may only happen if the technology is user-friendly. People are generally unwilling to give up control of their vehicles unless autonomous driving is safer than manual driving.
The development of autonomous vehicles has come a long way since its inception, and it's now at a stage where businesses are starting to invest. Insurance companies are no different, and many have been looking into the feasibility of self-driving technology for a while now.
Case study: Autonomous driving in Japan
On December 15 2021, eight Japanese firms, Taisei Rotec, Nippon Signal, Taisei Corporation, Sompo Japan, Tier IV, KDDI, Prime Assistance, and Aisan Technology, conducted a test of an autonomous driving mobile service utilising 5G internet.
It is a part of the Tokyo Metropolitan Government's "Future Tokyo" initiative aiming to create a smart city where autonomous cars are the norm. The policy goal is to put autonomous cars on the road by 2025 to reduce traffic congestion and accidents in the city, among other things.
Considering a viable use-case of self-driving cars connected to high-speed internet has already been demonstrated, it's probable other countries could follow suit.
What does the autonomous vehicle revolution mean for the insurance industry?
In terms of insurance, it's essential to consider what an autonomous world would look like. The most immediate impact of autonomous driving on the industry is the potential decrease in frequency and severity of accidents and less human error.
This change could mean a reduction in claims for insurers and a higher chance that drivers will be able to find insurance at more affordable rates, which is good from a user experience perspective.
Entry into new insurtech verticals and business models will be necessary to survive
Insurers will need to find new ways to generate revenue from a business perspective as the traditional car insurance model may no longer be applicable.
Products and services
One option is for insurers to focus on offering services to complement autonomous driving, such as providing roadside assistance or vehicle maintenance. Another possibility is they could move into other areas of the transportation industry, such as supplying technology to autonomous cars or managing fleets of autonomous vehicles.
Cyber insurance
If the car hacking scene from the 'Fast and Furious 8' movie is anything to go by, cyber insurance could become the next big thing in the industry. First though, the industry must look into how autonomous vehicles are affected by cyber threats, as it's possible that hacking cars could become a new form of carjacking.
Big data
Considering autonomous cars will be connected to the internet, it's likely that insurers will be able to utilise the data they produce for insurance purposes. According to Siemens, each autonomous car could generate up to 40 GB of data every hour, which can provide valuable insights into driver behaviour and driving patterns.
Everything from the time of day a car is most likely to get into an accident to where cars are being driven can be identified and used to create more innovative insurance products.
Regulations
Bringing in regulations will also be crucial for the industry, as autonomous driving will present new challenges and opportunities. For example, who is liable in the event of an accident? The driver, the car manufacturer, or the software supplier? How can privacy be protected?
These are just some of the questions insurers must ask as they look to prepare for a future with autonomous vehicles from a regulatory perspective.
The future is now
To sum up, the future is now with autonomous driving and insurance technology. It's essential for insurers to be proactive about doing their research so they can survive in this brave new world of transportation.
With the development of technology like machine learning and advanced sensors for self-driving cars, it's essential for the insurance industry to take note and be ready.
