Auto Insurance industry's collision with driverless carsIntroduction
Driverless cars an innovation and milestone in auto-
industry
eOne car -solution to many problems such as
casualties, traffic crashes, traffic jams, parking space
o US auto-insurance model
Liability
Who will be liable:
Owner or manufacturer?
. Complexity in deciding liability:
Technical fault auto-manufacturer
External factor car owner/Insurer
e Manufacturer Insurer and Insured!
May provide limited insurance agent
May need to get insured to cover risk of bulk-produced faulty
applications
Underwriting and pricing
Ri5K ?
Driving record
It will be obsolete, but may be replaced by system credibility of
driverless car the personal insurance
The type, make and model of car
Premium will be high as car will be expensive
. Type and amount of coverage
Risk of damage/theft is more, risk of accidents is less
Obsolete factors - age, gender
. Car will be insured, not the car-owner!
Claims
CLAIM FORM
. Industry is fueled by claims
Major accidents - one every 14 sec
Fatal crashon
. Largest non-life insurance groups
sector
But picture is changing...
Claims (contd..)
In past 10 years, net premiums are down by 7%
In next two decades-claims may reduce by 90 %
nature of claims will change
e Claims fraud will be eliminated due to availability of
huge data related to every single motion of cars
involved insurance broker
e Claims inflation will stagnate
. Role of claims handlers and adjusters will change
Profitability
- Premiums o Frequency, severity of accidents
- e Reduce net premiums means less revenue
- . Shrinkage of industry: s200 Billion
- s20 Billion
- However, few experts claim that due to increased
- severity and cost to fix cars, business will be more
- profitable
Strategy
- Insure need to make strategic choices
- due to lack of actuarial premium data
- Few insurers will delay price-reduction and enjoy
- short-term profit
- , focused on transition, will reduce prices,
- steal the best customers and gain market share
- Strategy is the key point to survive the impact of
- driverless cars!
Conclusion
Significant role of manufacturers in
insurance policy
processes will be car-centrid
Much like home insurance Claims rare ,but high
. Challenges for auto-insurers - maintain profit margin,
decide the right strategy
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