- Motor insurance industry faces radical restructuring
- Safer autonomous cars mean billions less premiums
- ‘Seismic challenge to auto insurance as we know it
COMING SOON – VOLVO’S AUTONOMOUS CAR: A London seminar has pointed out the peril – for insurers – of the Fourth Industrial Revolution. Image: Volvo
Insurance cover for autonomous – self-driving – cars has long been a worry. Who will pay if one crashes, especially if people are hurt, should a computer be at the wheel?
Would it be covered by the car’s warranty? Would the computer’s lawyer argue that it was the fault of the human driving the conventional car? How do you cross-examine a microchip?
In the case of death, who would go to jail? This week in London, England, a seminar examined the insurance situation and came up with an answer – “a period of radical restructuring”.
CRASH FREQUENCY LIKELY TO DROP BY 80%
Consensus was that that was what the multi-billion pound UK motor insurance industry faces as a result of the advent of autonomous cars and it’s the opposite to what you might have thought.
With the number of crashes said to be likely to fall by 80% by 2035 insurance premiums set to plummet, the high-level panel discussion organised by Volvo Cars and Thatcham Research was told on May 3…
Research by Swiss Re and HERE released in April 2016 calculated that autonomous driving (AD) technologies could wipe $20-billion off insurance premiums globally by 2020 alone and that’s scare the hell out of insurers because, at present, vehicle insurance generates 42% of all non-life gross premiums – the largest single slice of global premiums.
Volvo Cars believes insurers will have no choice but to react to seismic challenges to its existing business model.
Håkan Samuelsson, president and chief executive at Volvo Cars, told the seminar, ‘A Future with Autonomous Driving Cars – Implications for the Insurance Industry’: “The medium-to-long-term impact is likely to be significant but let’s not forget the real reason for this – fewer accidents, fewer injuries, fewer fatalities.
FIRST SALES LIKELY IN 2021
“Autonomous driving technology is the single most important advance in automotive safety in recent years.”
Peter Shaw, chief executive at Thatcham Research, said: “Vehicle manufacturers are predicting that highly autonomous vehicles, capable of allowing the driver to drop out of the loop for certain sections of their journey, will be available from around 2021.
“Without doubt, crash frequency will also dramatically reduce. We’ve already seen this with the adoption of autonomous emergency braking (AEB) on many new cars. Research by the United States’ National Highway Traffic Safety Administration predicts that by 2035, as a result of autonomous and connected cars, crashes will be reduced by 80%.
“Additionally, if a crash can’t be avoided, then the impact speed will also drop as a result of the system’s performance – reducing the severity of the crash.”
AUTOMAKER COMMITTED TO ROAD SAFETY
That would, theoretically, reduce the cost of the collision and retrospectively reduce the premiums to be paid.
Volvo Cars is fully committed to maximising the safety benefits of AD. It announced in April (2016) that it would start the UK’s most extensive AD trial in 2017 with as many as 100 AD cars carrying ordinary people on normal roads as part of its global push to develop AD cars.
Similar programmes will be run in Sweden and China.
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Samuelsson added: “The automotive industry cannot do this on its own. We need governmental help. It’s essential that automakers work with governments to put laws and regulations in place that allow us to get these cars on the road as soon as possible – and start saving lives.”
‘TRIALS WILL BECOME INCREASINGLY COMMON’
Sajid Javid, UK Secretary of State for Business, Innovation and Skills, said at the seminar: “Driverless cars will see our journeys become faster, cleaner and safer. The UK is leading the way in developing technology to make this a reality thanks to our world-class research base.
“Such trials will become increasingly common. Such advances in technology prove the fourth industrial revolution is just around the corner and our determination to be at the forefront is why we are attracting top names from across the globe for real-world testing.”
Samuelsson was also looking forward to working with the UK government to ensure AD was introduced as soon as possible.
“The advent of autonomous driving is a revolution for automotive safety,” he concluded. “Volvo has a vision that nobody will be killed or seriously injured in a new Volvo by 2020. Autonomous driving technology is a key tool to help us achieve this goal.”