From driverless cars to alternative-fuel vehicles, cars are quickly becoming the most advanced computers we use.
So what does the future hold for personal lines insurance when talking serious innovation in cars?
According to Discovery insure CEO Anton Ossip, from driverless cars to alternative-fuel vehicles, cars are quickly becoming the most advanced computers we use.
What does the future hold for personal lines insurance when talking serious innovation in cars? he asks.
Globally, a million lives are lost and 50 million people are injured on the roads due to driver error annually. According to James Dalton, former head of Motor at the Association of British Insurers, “human error accounts for around 90% of road accidents.”
But new technologies may significantly reduce this figure; and change the way insurers do business.
Driverless or self-driving cars like Google’s pilot project, have sensors which detect distant objects in all directions. Sophisticated software processes multiple data points to help the car navigate safely.
The cars sensors have a wide field of vision and the ability to predict and react to various stimuli.
The driverless car also has the ability to learn how to navigate tricky situations without becoming tired or agitated.
The promise for road safety is clear. Self-driving cars have the potential to completely remove driver error as a factor in road safety, thereby dramatically improving the safety of our roads. This will have a substantial effect on how motor insurance will work.
Forbes’ analysis of the future of motor insurance in the context of driverless cars, argued that insurers will have to focus on product innovation, customer relationships, claims processing, expense management, and distribution to maintain market-share.
As premiums are currently based on the frequency and severity of accidents as well as with the risks attached to the driver, motor insurance premiums will inevitably be effected as these no longer feature. Theft, inclement weather, and liability risk including manufacturing faults, however, remain.
Premiums will also be adjusted to reflect the potentially increased safety of cars. However, Bloomberg Business notes that insurance against cyber hacking may become an important addition to traditional car insurance models.
One way that claims could be affected is that while the frequency of accidents may decrease, the severity of accidents may increase. Even a minor collision may be worth more in insurance terms because of the hefty cost of the technology.
Liability may also be diverted from insurer to manufacturer, as accidents may result from manufacturer error rather than driver error.
As Forbes reports, motor insurance may evolve to be more like household insurance with rare but significant claims made against the policy.
As an innovative and technologically advanced insurer, Discovery Insure welcomes motor vehicle technology which has the potential to improve the safety conditions of South Africa’s roads.
Discovery Insure’s current offerings perfectly position the insurer as having the technological expertise and knowledge to provide appropriate insurance solutions as self-driving cars become a reality.
Innovations in motor vehicle design and technologies increase safety have thus far done little to address the risk associated with the driver. Self-driving cars offer a solution to concerns around the difficulty involved in changing driver behaviour.
Progress towards self-driving cars is rapid, despite the potentially inhibitory cost and regulatory downfalls, not least of which being the transition from ‘driven’ to ‘self-driving’ car. As technology enables reduced risk and increased safety on our roads, Discovery Insure will embrace this positive change.