The Rise of Autonomous Vehicles and How Insurers Adapt
Autonomous vehicles have the potential to change our lives. There is little doubt that the widespread adoption of autonomous vehicles will have a huge impact on the automobile insurance industry
This rapid growth of autonomous vehicles will involve a major shift, not only in our driving habits and patterns but in the ownership of vehicles.
It is possible to assume that autonomous vehicles could be owned auto manufacturers who hire out vehicles as services. They may no longer be owned by individuals.
Typically, cars owned by individuals sit idle most of the time. If autonomous fleets come to fruition vehicles may be out on multiple trips on a 24-hour basis. Since insuring privately owned vehicles could quite possibly be a thing of the past, what could be considered the bread and butter of the insurance industry could be lost. Insurers will need to find a new form of revenue as their future growth and profitability could be at risk.
However, auto insurers have a factor leaning in their favour, time. It is more than likely the shift to fully autonomous vehicles will be a gradual and occur in stages, however, it will be inevitable that in the next 20 years there will be many more autonomous and semi-autonomous vehicles on the road than traditional vehicles.
Autonomous travel is currently predicated to remove revenue from the insurance industry. Therefore, the industry will need to look for robust replacements for a key part of the industry. This could come from a couple of places;
Cyber security. Cyber security is fast becoming a buzz word in the industry and is affecting a lot of areas of business and it will also heavily impact the rise of autonomous vehicles. Automated cars will be reliant on computer network systems as cars become more automated the risk of cyber theft, ransomware, hacking, and the misuse of information related to automobiles will become much greater.
Liability. With an abundance of autonomous or part autonomous vehicles on the road, there will be a strong argument that drivers can’t be at fault and that any collisions that occur are the result of product failures. The liability for failure through software bugs, defects and errors resulting in damage or accidents is a real risk for manufacturers of automated vehicles
Infrastructure. As technology becomes more relied upon the infrastructure to support autonomous vehicles will grow. That infrastructure will need to be protected and insured for numerous risk factors including malfunction or physical damage as well as liability and cybersecurity.
A stark strategic choice lays ahead for the insurance industry. The future will be dominated by autonomous vehicles, and the first stage has already begun. They can continue to conduct business as usual, fighting for pieces of a shrinking pie but in reality, auto insurers need to face reality now and be ready and willing to change the way they view risk and the outlook of the industry.