There are long lists of industries that will be disrupted by Autonomous Vehicles. Not surprisingly, Insurance is expected to be one of them. Some see tremendous opportunities arising from the increasein Autonomous Vehicles. That translates to less revenue in premiums. So where is the new revenue coming from?
But then there are the new opportunities! Cyber security insurance will be a requirement for manufacturers and OEM owners. Hacking is already a concern with vehicles and they are far from fully autonomous. The more systems become integrated, the more systems connect to the internet-of-things, and the more systems are software based instead of hardware, the bigger this concern will be. These vehicles are going to collect a virtual treasure trove of personal and use data. Data breaches are already so common that writers rank them by severity. Not only will a breach expose someone’s personal information, but it will expose all the linked accounts in the vehicle and the entire driving history of that vehicle. The liability for any company that suffers that data breach is incalculable. OEMs and their suppliers will also have to alter their product liability insurance. Those in the sensor and software industry are going to need to bulk up on their product liability insurance; another potential avenue for growth.
Insurance industry disruption is at its earliest stages, but it already has a name: InsurTech. While new, it already has its own conference, Insuretech Connect. While only about 10 years old, this is already a $2.6 billion sub-industry. Most recently, California-based Avinew received $5 million in funding. Avinew’s technology uses artificial intelligence and telematics to gather driving data that can tell when a vehicle is in autopilot mode or is using advanced safety features. This allows the company to reward drivers who use the safety features. The company ran a pilot of Tesla drivers and “nearly 7 in 10 participating Tesla drivers said they’d consider switching to an insurance policy that included a discount for Autopilot usage”. Of course, it is just this kind of data gathering that is going to require companies like Avinew, the insurers working with them, and the OEMs to have robust cybersecurity protections and insurance themselves.
Another area of insurance changes will be with respect to infrastructure. Autonomous vehicles must connect with a whole new world of sensors, systems, servers, etc. As of now, most automotive infrastructure is government owned. Will it still be? Accenture and the Stevens Institute forecast that this infrastructure will be owned by manufacturers or service providers. This could be true as the data in that infrastructure will be valuable. However, if they own the infrastructure, they will own the liability for it. This means that they will have to insure for failures due to malfunction, hacks, disruptions, etc. If the government continues to own such infrastructure, the costs of building and maintaining it will have to be covered in addition to the cost of maintaining basic roads.