Tom Super is director of the property and casualty insurance practice at J.D. Power. The firm has published a number of studies related to autonomous and connected vehicles, including a recent report on how self-driving vehicles will affect the insurance industry. The company recently found that 14 percent of survey respondents definitely would take a ride in a self-driving vehicle, while 33 percent probably would and 17 percent definitely would not.
How are insurance carriers approaching the question of autonomous vehicles and liability?
You have to take a step back. There are a lot of discussions about the future state of full automation. That grabs headlines, but in reality what we see is an incremental movement toward autonomy. We already have partial automation technologies like lane departure on the market. Most consumers still don’t even have partial automation features.
Insurers are not prepared for the impact that partial automation is having. Most do not offer incentives for customers who buy those features. There’s a lack of linkage between claims and product development. We found that 40 percent of consumers are willing to switch auto insurers if there were discounts for autonomous technology.
The general thinking across the industry, though, is that autonomous technology will reduce the frequency of accidents.
What should insurers be doing?
The majority of carriers are taking a wait-and-see approach. The smarter carriers are taking a more active role. If you look at what happened with ride sharing, the carriers really took a more reactive approach and it caught them off guard.
Smart carriers are actively investing in these capabilities through their venture capital divisions. They hope to get on the potential upside of the revenues, and also to corner the market on the intellectual property that’s emerging. They are also forming partnerships.
What about ownerships of the data being generated by these vehicles?
That, along with liability, are ultimately going to be decided by the courts. Who owns the data related to a vehicle after an accident? As the technology becomes more standardized, it raises a lot of questions about data security and privacy.
For the insurers, the data can create a better linkage between claims and product development. Will it be in their interest to incentive customers to use those technologies? The expectation is that this could have a downward effect on premiums.
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