Are autonomous vehicles
the end of the road for car insurance?

It’s been a long and winding road since Karl Benz patented the first gas-powered car in 1886.

Much of Generation Z won’t even realise you used to have to wind up a car’s windows manually – one door at a time. While it’s safe to say those days are well and truly behind us thanks to our cars becoming more digitised, we still haven’t figured out how to make them completely safe.

Road deaths continue to rise and estimates suggest human error is at least partly responsible for more than 90% of all road fatalities. According to the World Health Organisation’s 2015 stats, vehicular deaths are the tenth biggest killer on the planet, the only cause in the ten that isn’t health-related.

The omnipresent risk from a car journey has meant insurers have played a crucial role in the auto ecosystem since cover became compulsory back in the 1930s.

Information Superhighway

The next tectonic shift in the driving experience (after the introduction of electric windows, obviously) is the march towards fully autonomous or driverless cars. The automation of our roads promises to make them safer than ever before by removing the human element. But where does this leave the insurance industry? Some estimates suggest demand for auto insurance could shrink by 80% in 2040.

“We don’t think insurance will fall off a cliff, it will be a gradual process.” says Sebastiaan Bongers, Head of Automotive Solutions at global insurance giant Swiss Re.

“We’re currently seeing a demand for different types of insurance products growing, which is why we started our IoT platform. Based on that we can offer telematics-based reinsurance so we allow or help insurance companies offer telematics”

Telematics or M2M powered analytics enables real-time insights into things like geolocation, speed, driving habits – even how fast the driver takes a corner. Swiss Re’s approach is to provide insurers with an easy way to offer tailored, usage-based insurance models that reward careful drivers and encourage road safety.

Plug and Play

The company recently collaborated with Microsoft in a showcase at CES where Azure-powered bots were used to detect driver engagement and deliver safety information.

The system uses either the driver’s mobile phone or a ‘black box’-style dongle for connectivity. Italy is currently one of the biggest early adopters of Auto M2M with 26 insurers in the Italian market offering telematics policies.

Geo-mobility consulting firm Ptolemus expect nearly 100 million vehicles to be covered by telematics insurance by 2020 and Swiss Re are aiming to make commercial adoption as easy as possible.“The IoT platform is very scalable” continues Bongers. “If we have a client in Singapore, we can deploy the platform in just 15 minutes and the data can be collected and stored in that market to guarantee data privacy”.

We recently spoke to Sebastiaan to find out more about how IoT is disrupting the insurance market. Listen below

Also available on Soundcloud and iTunes.

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