Insurers Beware: Speedbumps on the Road to Autonomous Vehicles

What Happens When Cars Have Two Drivers
by Craig Beattie, April 24, 2015
Industry Trends
Global

Abstract

Since the creation of the automobile, the single truth has always been that the driver is required to be in control of the car. Many Western countries are entering a time of shared responsibility for the activity of driving, where the car may drive itself some of the time. This era will bring new risks that insurers must track if they are to respond appropriately and do what is best for the insured, as well as for their shareholders and members.

In Europe, the highest safety awards from the EuroNCAP will now be reserved for vehicles that can brake on their owner’s behalf rather than collide with an obstacle in front of them, among other technologies. Similarly, in the United States the National Highway Traffic Safety Administration (NHTSA) will identify vehicles with advanced features as safer than their counterparts. Cars that interfere with driving are already here, but are today’s drivers ready?

Advanced safety technology and self-driving cars are set to change the automotive industry forever. While most eyes are on the risks to the industry of robot cars, we are entering a transitional period where experimental driving technology will be in control of vehicles on today’s roads. Celent predicts the overall effect will be to reduce both the severity and frequency of accidents, but adoption of these new safety features could increase less severe accidents and related repair costs.

Celent has already predicted the end of auto insurance, and an upcoming report will review this topic again in 2015.

“Before ‘carmageddon,’ society will experience a time of continued innovation and testing in car technology that may last decades,” says Craig Beattie, a senior analyst with Celent’s Insurance practice and author of the report. “Insurers who choose to continue to offer auto or car insurance will need to navigate this era carefully in order to remain profitable and to offer a good service to their customers.”

Celent identifies the new hazards and some scenarios related to the adoption of robot cars on today’s roads. Celent goes on to identify the milestones in this adoption and outline the issues each could present the insurance industry and how they should respond.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Key Research Questions

1

The Rise of Simple Autonomous Vehicles

3

 

Defining Simple Autonomous Vehicles

3

 

Technologies Behind Simple Autonomy

4

 

The Exception — Required Safety Technology

4

 

Road Monitoring

5

 

Driver Monitoring

7

 

Summary List of Advanced Driver Assist Systems

8

The Technology Is Here: What Happens Next?

10

 

Voluntary Adoption Phase

12

 

Preferred Adoption Phase

13

 

Widespread Adoption Phase

16

 

Summary

17

Six Reasons to Watch for Simple Autonomous Vehicles

18

 

Reason 1: Technology Failure

18

 

Reason 2: Safety Feature Repair Costs

19

 

Reason 3: Driver Ability to Assess Risk

19

 

Reason 4: Deliberately Distracted Drivers

20

 

Reason 5: Driver Alerts or Driver Distractions

21

 

Reason 6: Reduced Perceived Value of Insurance

21

Moving Forward

23

 

In Brief

23

 

New Hazards Insurers Must Track

24

Leveraging Celent’s Expertise

25

 

Support for Financial Institutions

25

 

Support for Vendors

25

Related Celent Research

26

Sign in to download reports and access personalized information