As a regular reader of Telematics.com’s high quality content, no doubt you are already well aware of the danger that driverless cars pose to the insurance industry. When no one is having accidents, who needs insurance? And arguably, can a ‘driver’ even be held responsible when they had no input into the car’s actions? Shouldn’t the manufacturer or the individual programmer that made that faulty algorithm be held responsible? Do they need insurance?
These are all the sorts of questions that will be asked by governments and researchers as they further develop and apply driverless car technology to our roads. Insurers however are apparently less concerned and that’s a problem. Recently, the Commonwealth Bank of Australia’s insurance analyst, Ross Curran, sent out a research note to many of its clients, highlighting the dangers posed by automated vehicles and a few steps the insurance industry should take in order to combat its impending decline in relevance.
“Unless mono-lines motor insurers could quickly adapt to currently non-core lines of insurance, their revenue streams could be severely impacted,” Mr Curran said in his note (via SMH).
“There is also an opportunity for product innovation by insurers in order to gain market share in a new product,” he said.
He suggested that perhaps the best avenue to go down for insurers was to begin offering packages for specific products. Smartphones and other gadgets could have insurance packages made for them, and perhaps they could be bundled together into larger and more expensive premiums. Similarly so, insurers could still offer to provide coverage for automated vehicles against theft, but they would be incredibly low, as as soon as they went missing, they could be told to drive home – and they would. The thieves would be out of luck unless they found a way to wipe the internal software and turn off all of their tracking mechanisms.
Moving forward though Curran suggested that the best thing insurers could do was investigate new revenue streams. Test the waters and see how they perform, as before long many of the companies that are dominating today in the fields of insurance, will see their revenue diminished considerably. Of course other insurance premiums like health and home contents will still be important, but automotive insurance is a big earner and it could be going away over the next few decades.
Stephen Browne, head of insurance at technology giant CSC Australia agrees, stating recently:
“It’s definitely coming, and companies need to look at all these disruptive plays. The challenger brands will look at these technologies readily and move quickly.”
Image source: Andrew Steinmetz