Insurers Beware: Speedbumps on the Road to Autonomous Vehicles

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


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 operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

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Michele Pace
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Chris Williams
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Table of Contents

Executive Summary



Key Research Questions


The Rise of Simple Autonomous Vehicles



Defining Simple Autonomous Vehicles



Technologies Behind Simple Autonomy



The Exception — Required Safety Technology



Road Monitoring



Driver Monitoring



Summary List of Advanced Driver Assist Systems


The Technology Is Here: What Happens Next?



Voluntary Adoption Phase



Preferred Adoption Phase



Widespread Adoption Phase





Six Reasons to Watch for Simple Autonomous Vehicles



Reason 1: Technology Failure



Reason 2: Safety Feature Repair Costs



Reason 3: Driver Ability to Assess Risk



Reason 4: Deliberately Distracted Drivers



Reason 5: Driver Alerts or Driver Distractions



Reason 6: Reduced Perceived Value of Insurance


Moving Forward



In Brief



New Hazards Insurers Must Track


Leveraging Celent’s Expertise



Support for Financial Institutions



Support for Vendors


Related Celent Research


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