Keeping up with shifts in the motor risk landscape
At the end of the 1980s film Back to the Future, Doc Brown shows up at Marty McFly’s house, insisting he travel to the future (2015) with him. When Marty and Jennifer get into Doc’s DeLorean, Marty worries the car will not hit the 88 mph it needs to travel back in time. Doc simply responds: “Roads? Where we’re going, we don’t need roads”.
While flying DeLorean cars are not a reality for the everyday consumer, for insurers in the motor insurance market, driverless commercial vehicles are not as far away as some might think.
According to insurers involved in the motor industry, consumers are now trialling driverless cars. Axa, which is advising the UK government on the impact of driverless cars, is optimistic about the future. Axa believes premiums will fall in the long run. This fall is triggered by Axa’s view autonomous cars are safer on the road as they are not prone to human error.
The prevailing view of car manufacturers is focused too heavily on the consumer and their needs. The technology is nascent but the biggest challenge is how insurers and manufacturers work together in respect of issues when the technology fails or an incident of some nature occurs.
Clearly, driverless cars will be a motor risk but the key issue is when an incident occurs involving a driverless car. To comprehend what caused the incident, a transfer or exchange of data and information in relation to the incident from the manufacturer will be required. How will this work in practice?
Typically, when a new series of car enters the market, motor underwriters will want the risk profile and risk assessment of the driver, but will also assess the new series of car for potential risks. While a risk assessment is conducted on an annual basis, a risk profile is meticulously built over time through an accumulation of data about an individual (for example, age and health).
Yet, the rise of driverless cars has forced the need for insurers and underwriters to have real-time data. This real-time data will therefore mean both risk assessment and profiles will become a continuous process rather than a fixed one.
While the future is unknown; one thing is for certain; motor insurance will never be the same again.
This is an extract of the full article by Suki Basi, chief executive of the Russell Group. This first appeared in Insurance Day, 4 September 2017.
i-law.com brings you more on the topic of driverless cars in the insurance sector:
The gulf between assisted and autonomous driving could prove to be a legal minefield, according to a panel of experts speaking at global law firm Clyde & Co’s seminar on the future of autonomous vehicles. The panel said that while the two types of driving may seem similar, the difference between them could prove to be a challenging battleground for the insurance industry in the development of self-driving vehicles.
Liability, Risk and Insurance, September 2017
“Assisted” and “autonomous” driving may seem similar, but the difference could prove to be a challenging battleground for the insurance industry in the development of self-driving vehicles. There is a legal grey area between a car fully under its own control and a car that is nominally driving under its own control but still requires driver supervision.
Insurance Day, 9 August 2017
A report from the RAC Foundation has pointed out that the arrival of autonomous and connected cars “will add weight to the case for improved highway maintenance, not only to tackle the huge backlog, but also to ensure the associated communication and information systems are up to standard and offer comprehensive coverage”.
Liability, Risk and Insurance, May 2017