Blog: Insurance will drive semi-autonomous cars

Barely a day goes by without an article appearing in the insurance press concerning the massive transformation within the motor insurance market due to the advent of driverless technology. But, when can we expect to see this change?

Research by Thatcham seems to conclude that fully autonomous cars will not be with us until the longer term (2020-2040) with a number of obstacles still to overcome.

However the key point is that we are already seeing a rapid expansion of semi-autonomous driving features including:

• Park assist
• Autonomous emerging braking (AEB)
• Adaptive cruise control
• Electronic stability assist
• Lane departure warning

Autonomous braking (AEB) systems alone are said to reduce accident rates by 38%, and injury rates by 18% and are already available as standard in the Volvo AC60 and these systems present real opportunities for insurers.
Such is Volvo's confidence in technology that at a recent speech, Håkan Samuelsson, president and chief executive of Volvo Cars, revealed that the manufacturer plans to accept liability for its driverless cars when they are in autonomous mode.

Roads will increasingly become a mix of cars with semi-autonomous through to highly-autonomous features but what will happen to motor insurance in the interim as roads become a shifting mix of technology and human beings?
Our driving awareness and reactions will be pitted against the might of technology already able to land an airliner, so let's think for a moment, in a collision between a manual driver and a semi to highly autonomous driven car, who is likely to be at-fault?

Dmitri Dolgov, head of software for Google's ‘self-driving car' project, said that one thing he had learned from the project was that human drivers needed to be "less idiotic". If you need further proof, Google's driverless cars in the US have already been shunted in the rear several times by the likes of you and me.

The consequences for insurance are surely clear. With ever increasing levels of automation and ever reducing input from the driver, the likelihood of collisions being associated with manually driven cars will increase, which will in turn lead to greater risk selection against manual cars.

There will be an increasing cost of insuring manual vehicles as those with more autonomous cars attempt to exit the market for the specialist policy providers. These schemes themselves could in turn be quite profitable for the insurance carriers, with reduced levels of personal injury claims.

A specialist policy, not too dissimilar from today's telematics, will be available combining technology platforms, vehicle manufacturers, such as Volvo, Tesla with Google or Amazon providing the geospatial technology and driving algorithms, and an underlying insurance carrier.

So ultimately it may be that insurance will actually become another driver of the accelerated development of autonomous vehicle features. We will see a shift towards personal liability, products insurance and infrastructure liabilities based on a categorisation of semi-autonomous, highly-autonomous, and fully autonomous vehicles.

Ready or not, motor insurers, already feeling under pressure on motor combined ratios and who are about to be challenged by other types of disruptive market entries - the Friendsurance, and Cuvva's of this world - and need to seize this opportunity before Google, Apple, and Amazon do it for them, and soon.

Adrian Dobrovicz
Consultant at Altus