Tim Evershed examines mobility and automation in motor insurance
The way we drive is evolving and the pace of change will only increase as we move closerto the adoption of fully autonomous vehicles. Automation is already becoming a reality in the cars on the road and the designs on the drawing board, however, we still do not know or fully understand how it will impact drivers, society or the insurance profession.
Both cars and drivers -- whether human or automated -- are changing as the shift toward electric vehicles combines with the emergence of new digitally enabled models of mobility and increasing automation of driving. These automated vehicles will change motor insurance in terms of underwriting, pricing, sales, distribution and claims management.
As motor insurers prepare for this change, the Global Federation of Insurance Associations (GFIA) has released its guiding principles for the future of mobility and motor insurance.
These principles aim to ensure that the highest safety standards are maintained for all vehicles, while reflecting the technology used to operate the vehicles. They also try to determine new risks such as cyber incidents and ensure fair access to vehicle data for underwriting, rating, claims and fraud-fighting purposes, as well as for devising more innovative services around the vehicles.
Finally, they seek to address liability considerations to ensure claims proceed smoothly.
In terms of safety, the GFIA wants to see standards for the interface between the technology, which will operate the vehicle in certain instances, and the human, who will operate the vehicle in others.
The GFIA says that insurance regulators "should encourage the development of an open and competitive market for coverage for new risks associated with operating a vehicle, such as cyber incidents".
In addition, motor insurers "should be able to limit coverage to reasonable use and proper maintenance/updates". The GFIA adds: "Automated driving should not be available if any safety-critical software updates are not installed."
Don Forgeron, GFIA vice-president and chair of the disruptive technology working group, says: "For public acceptance, it is essential for these new cars to have high safety standards and an efficient compensation mechanism for victims of accidents, such as insurance.
"For insurers to be able to provide cover, it is essential for them to have access to the data generated by both connected and automated vehicles, so that they can understand the risks they are underwriting. Access to this data is also essential in handling claims as efficiently as possible -- for example, data from vehicles regarding an accident -- and in helping insurers to provide their customers with new products and services in and around the vehicle.
"However, vehicle manufacturers currently act as the gateway to vehicle data, when it is consumers that should really be in the driving seat. For a successful uptake of these vehicles, it is essential for consumers to really decide who has access to their vehicle data and for what reasons."
LEVEL OF AUTOMATION
Autonomous driving has several different levels -- from 'driver assistance' where features aid safe driving but the driver remains in control, to 'fully autonomous' which is a completely driverless car, able to monitor and manoeuvre through all road conditions.
The levels inbetween gradually progress the amount of automation from assistance with speed and steering, to vehicles that can drive themselves under limited conditions.
Graeme Trudgill, executive director at the British Insurance Brokers' Association, says: "There are many considerations for any insurance broker considering the future of the motor insurance market. Ongoing debate includes the Law Commission's approach to insurance for autonomous vehicles, where liability requirements could change. In addition, the increasingly wide use of databases and credit referencing has had a significant impact already and will continue to do so."
Autonomous vehicles will create and collect huge volumes of data and its use will be vital to the success of future motoring.
The GFIA says that vehicle data should be available on fair, reasonable and non-discriminatory terms that enable fair competition among service providers.
It also says that, in the event of a collision involving an automated vehicle, insurers should have access to sufficient data to establish whether the automated driving system was in control leading up to the incident. All collision and emergency system intervention events should trigger a data transmission.
Also, as with any connected device, a connected vehicle is potentially vulnerable to hacking or security breaches, creating a whole new class of risks that drivers, manufacturers and insurers will need to learn to manage.
Mr Forgeron concludes: "Access to vehicle data can provide a huge opportunity for insurers to improve their customers' experience in a variety of ways. This includes the potential offered by vehicle-generated data to underwrite policies more accurately, manage claims and fight fraud more effectively, while also to provide more advanced services in and around vehicles. The use of vehicle-generated data will make both the underwriting process and claims decisions more accurate and more efficient."
Tim Evershed is a freelance journalist