A world of driverless cars is fast approaching and industry polls are working hard to predict the future.
An analysis from Frost & Sullivan, Impact of Automated Vehicles on Motor Insurance Market, is suggesting motor vehicle insurers will move away from driver-centric coverage with the advent of driverless cars.
Product-centric, brand-centric or system-centric models are looking to be the favorable alternatives and it’s possible that companies may adopt one or a combination of the three.
A shift to any of these models will lay insurance responsibilities in the hands of vehicle manufacturers.
“Further, all excesses currently covered by the insured will be shared among several stakeholders, such as road-operators and local transport authorities,” said Frost & Sullivan automotive and transportation senior research analyst Kamalesh Mohanarangam.
The Evolution of Car Insurance
The report outlines that the risk of vehicle accidents will fall drastically and with it the insurance premium to cover those risks. Despite this, it is believed OEMs and suppliers will increase insurance spending to cover their share of product liability risk to offset shrinkage in consumer-driven insurance revenues.As OEMs and suppliers look to ensure fool-proof product safety, underwriters will adapt to evaluate driving algorithms and assign relevant risk priority numbers.
“For instance, with the digitalisation of automobiles, insurers will provide cyber coverage for protection against cyber-attacks and hacks,” added Mohanarangam.
This makes complete sense given IEEE’s recent survey, released October 15.
The survey polled members of the IEEE Intelligent Transportation Systems Society and IEEE’s social media communities. Participants ranked each option from one (most important) to five (least important).
Participants were asked to rank concerns on what needed to be done to ensure driverless vehicles could be considered safe as part of the survey. Social media participants gave cyber security an average rank of 2.4. Experts however, were most concerned with insurance and liability (2.6).
In addressing who is responsible in the event of a driverless vehicle crash, 54.6 of respondents selected the “car manufacturer or the developer of the car’s software.”
A prior vehicle hacking vulnerability survey by Kelly Blue Book (KBB) drives these results home.
Over 1,100 respondents from KBB’s Blue Ribbon Panel were surveyed between July 24-27, 2015. Of these, 78 percent of respondents stated that vehicle hacking will be a frequent problem in the next three years or less. Additionally, 58 percent of respondents believed there will never be a permanent solution to vehicle hacking.
Additionally, 81 percent of KBB survey takers thought the vehicle manufacturer would be most responsible to secure a vehicle from hacking.
"The key question here is whether the relevant technologies have reached a demonstrated level of socially acceptable risk," explained Bryant Walker Smith, a law professor at the University of South Carolina and expert on the legal aspects of increasing automation.
"Developers, regulators and eventually courts will consider how safe is safe enough, how certain is certain enough and how this performance should be determined, demonstrated and documented. These are crucial questions of engineering, law and public policy and they necessarily involve not only engineers and lawyers, but also the public at large," continued Smith.
Public Trust
According to IEEE’s survey, public trust or mistrust of driverless vehicles has no clear leaning in either direction.About 70.8 percent of experts and 59.7 percent of IEEE social media followers reported not being comfortable with the idea of autonomous vehicles picking up and dropping off their children. However, 75.5 percent of experts and 63.1 percent of social media followers would use autonomous cars themselves, for errands, road trips and general commuting.
"We want the technologies to come forth, but the priority is to make sure that the public is safe on the roads," said Bernard Soriano, deputy director for the California Department of Motor Vehicles.
"Autonomous vehicles present a myriad of technological and practical issues which need to be addressed moving forward. All of these topics are being discussed with the intention of setting forth regulations in the near future to encourage the continued development of the autonomous vehicle industry, while keeping the motoring public safe," said Soriano.
Over one quarter (26 percent) of expert respondents to IEEE’s survey believed that “policy and regulation” is the main barrier to mass adoption of autonomous vehicles. Alternatively, 30.8 percent of IEEE social media followers considered feeling trust in autonomous vehicle technology as the hurdle to cross.
No matter the general consensus, the driverless car industry is still in its infancy. Over time, autonomous vehicles will mature into trusted products operating within an adapted legal system or they will never pull out of our driveways.
Consumers will decide.
For complimentary access to more information on IEEE’s research, visit corpcom.frost.com. To learn more about Kelley Blue Book, visit www.kbb.com.