Autonomous Cars are Coming: Are Auto Insurers Preparing?
Driverless cars are expected to be safer, accident frequency is likely to go down and with that lower costs as to insurance coverage and claims payouts. Jared Smolik, the actuarial director of product development for Veritem Insurance Solutions indicated that it would be a long time for insurance companies to see gains because a simple fender bender could be costly to repair since these bumpers will likely contain several sensors and cameras.
Mr. Smolik indicated there will be a shift from personal ownership to commercial ownership as many of the cars, at least in the early stages, will be owned by autonomous fleets that are owned and managed by companies that may have a subscriber sort of business model. Mr. Smolik was of the view that autonomous cars would lead to a reduction in comprehensive claims given that vehicles could “move away” from storms heading their way. There will be rating changes once driverless cars hit the road as driver’s habits will no longer be the main focus and insurers will need to study how the vehicles differentiate between each other. Additional insurance coverage on a typical personal auto policy will include cyber liability insurance.
Changes to claim handling will also occur – vehicle recording data before and after a loss can help analyze the conditions prior to and during a crash; recorded information like acceleration and deceleration should make liability determinations easier. Mr. Smolik was of the view that once all cars on the road are autonomous, repairs may end up being cheaper as repair shops will not have to maintain a large inventory of parts as the car should be able to communicate the parts needed to complete the repairs.
Fraud should also go down since data from the vehicle will help validate and provide verification of the crash and possible injuries.
Auto insurers need to stay on top of technological advances and plan for a new business model, autonomous cars are coming!
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