The rapid increase in smart technology and the Internet of Things is readily apparent in the world of transportation. The decrease in road accidents attributable to smart car technology has been viewed as a major positive step for the automotive industry.
As Newton’s third law states, for every action there is an equal and opposite reaction. In this sense, as the number of road accidents fall, insurers could see premiums fall just as fast.
In just the past year, we have seen major advancements in autonomous vehicles, and it’s safe to say this progression is irreversible. The emergence of active safety, and advanced driver assistance systems (ADAS) functions have already, and will continue to drastically reduce the number of road accidents, leading to insurance companies having to re evaluate their premiums and how these will look in this new future.
ADAS systems were developed to both automate and enhance vehicular safety systems, leading to better driving, using a variety of features to avoid collisions or accidents by either taking over control of the car, or by alerting the driver to potential problems. Some of these adaptive features include automating the lights and brakes, providing adaptive cruise control, GPS/traffic warnings, staying in the correct lane, and connecting to smartphones.
These technical innovations have also led to changes in road law. Starting in 2018, the European Parliament’s ratification of the eCall mandate dictates that drivers do not have to have their hands on the steering wheel when automated functions are switched on. This change in law could lead to further insurance confusion, and reevaluations.
We are already seeing an increase in usage-based insurance (UBI), due to a push from several vehicle makers; including Ford, GM, and BMW who actively want these systems in place. The simplest form of UBI is based on the number of miles driven. From this simple starting point, technology like telematics allows insurance models to be based not just on the miles driven, but also how much you drive, where you drive, and what time of day.
Telematic usage-based insurance can provide more immediate feedback to the insurer, which leads to a change in cost for the individual’s insurance – increased, or decreased depending on the driver’s calculated risk. Using this system, drivers will have a much stronger incentive to adopt safe driving practices — for example, lowering the extra risk premium if the driver takes frequent breaks on long journeys, and increasing the premium if the driver uses their mobile phone while driving, or frequently exceeds recommended and legal speed limits.
It is estimated that by 2020, nearly 100 million vehicles (globally) will be insured based on these telematics policies, and most car makers will follow the lead set by Ford, GM, and BWM and adopt UBI.
While insurers are already adapting to keep up with the advancement in IoT and smart technology, there is yet another advancement in the works that will soon demand further change: moving beyond ADAS (advanced driver assistance systems) to fully autonomous vehicles.
Popular news stories indicate that Google is leading the way when it comes to autonomous vehicles. As the technology progresses, so does Google’s fight to shape the rules of the driverless road. Google needs to see a change in the federal, state, and local regulations that cover everything from whether cars must have steering wheels, to the big questions of who’s at fault if a driverless car hits another vehicle.
To make progress in this area they need to win acceptance across America for autonomous vehicles. There are now several states where Google is testing their driverless cars on public streets. Other companies (like Toyota, VW, and GM) developing driverless cars are also lobbying state and federal regulators, in an effort to bend the rules to their liking.
Google was granted an early victory at the beginning of the year when the National Highway Traffic Safety Administration ruled that a self-driving car, piloted by an artificial intelligence system, could be considered the driver, under federal law. This ruling could be the first step towards new regulations mandating that autonomous vehicles will not have to be made with accelerator/brake pedals, steering wheels, or any other controls for humans.
If autonomous vehicles are built without steering wheels, brake or accelerator pedals, this means that humans have no way of retaking control in a case of emergency. While this is a vast leap forward from ADAS, driver accountability and how you insure yourself as a driver, is is perhaps the only end result to this technology?
With these rules in place, autonomous vehicles could give everyone, including elderly, blind and disabled people the freedom of solo vehicular transportation by taking on the full responsibility. Realistically, driving isn’t a task that someone can just keep half an eye on, dipping in and out to keep aware just in case intervention is needed. Google and their fellow pioneers in the autonomous vehicle movement may be correct in thinking that it’s unrealistic to still expect humans to be at the ready, that it really has to be all or nothing (with emphasis on the all).
As driverless vehicles become more common, or even commonplace, it is inevitable that at some point a driverless car will be involved in, or cause a serious, or fatal, accident. At which point we will have to face some moral choices. With tried and tested advanced technology, it is likely that autonomous vehicles will cause far fewer accidents, or deaths, than human drivers currently do. But how will we react, and accept, any injuries or fatalities at the hands of a driverless car? What backlash will this cause, and will we be able to move past it?