Outside of the rare Google car sighting, autonomous vehicles, or A.V.s, have mostly been the domain of futuristic action movies. That fictional future, though, is now. A limited number of autonomous Volvo XC90s will be on the road this year. Audi’s self-driving A8 limousine is due out in 2017. Tesla plans to have fully autonomous vehicles available in 2018. Top executives at Ford and GM expect o launch fully autonomous vehicles by 2020. The U.S.
Secretary of Transportation said at the 2015 Frankfurt Auto show that he expects
driverless cars to be in use all over the world by 2025.
The twist, however, is that by 2025, the dominating force driving sales of those
vehicles will most likely be commercial or public fleet operators, rather than
While carmakers have been perfecting all this autonomous technology, the rest
of the world was getting cozy with Zipcar, Car2Go, Uber and Lyft. Now those
two disruptive concepts are merging, and the result is a seismic shift in the world
as we know it.
Because driverless cars eliminate human error and human foibles like road
rage and texting while driving, accident rates are expected to decline. Combined
with an overall decrease in ownership, some say that will — eventually — cause a
drastic upheaval in the auto insurance industry.
“Right now … everybody’s wringing their hands,” said John Lucker, global
advanced analytics & modeling market leader with Deloitte Consulting.
“Half of all premiums are going to disappear! The industry’s going to blow up!
The personal lines market is going to disappear! And we’re saying, ‘Well, time out
The likely reality is more nuanced. Deer will still dart into the road in the blink
of an eye. Stray softballs and golf balls will still take out windshields. Car theft isn’t
going away. And of course, machines can malfunction or be hacked. Insurance will
remain as necessary as ever, but coverage needs will shift in a variety of ways.
“There’s going to be a blurring of the distinctions between various types of
commercial insurance and personal insurance,” said James Guszcza, U.S. chief
data scientist for Deloitte Consulting.
Sorting through it all is going to be incredibly complicated for carriers, as
STRAP IN FOR THE
By Michelle Kerr
When autonomous vehicle technology meets the sharing
economy, numerous industries will need to brace for
change, the insurance industry included.
personal ownership slowly gives way
to increased commercial ownership,
in the form of driverless “Uber
armies” or large A.V. fleets. There
will also be a long period when nonautonomous, semi-autonomous, and
fully autonomous vehicles will all be
in the mix to varying degrees.
“Until all of the vehicles on the
road are autonomous, how do you
mix and match this?” asked Lucker.
“Your car is acting on its own,
then it crashes into somebody who’s
driving. How do you figure out who’s at fault? And then, is it a software issue? Is it
your liability because you [own the car]? Was it the fault of the [human driver]?
“I don’t think that these things are going to go away,” Lucker said. “There’s
obviously a blending of commercial auto, personal auto, potentially E&O for
software developers, potentially some sort of product liability risk if a sensor didn’t
work properly on the autonomous vehicle … there’s a lot of stuff going on here
that traditionally has always been assumed to be a simple personal auto coverage.”
“This is a spectrum,” said Guszcza, “and we’re moving along that spectrum.”
HOW QUICK A SHIFT?
Opinions vary widely on how fast this transformation will come to pass.
Looking out to 2025, “you are going to find universally available cheap
automotives, but those are probably going to be bought by self-drive fleet-manager-as-a-service type companies,” said Chris Smedley, CEO of Digital
Habitats Corp. and longtime technology entrepreneur.
“Most of us are going to pay for transportation on a per-use basis.”
The rise of mobility as a service (MaaS) is taking hold quickly, and human
drivers are indeed being pushed out. Uber CEO Travis Kalanick expects the entire
Uber fleet to be driverless by 2030. The foundation is already being laid.
In August, the MIT-born company Nu Tonomy launched a test fleet of six
self-driving taxis in a small section of Singapore, with human drivers on board to