“Safety on the roads has always been a main issue”.
Are connected vehicles able to solve this problem? People are eager to solve major issues such as accidents caused by young and inexperienced drivers and to decrease probability of being injured.
“In recent years, the automotive industry has invested most of its energy into building vehicles that are safer to drive and protect passengers in the event of a crash.”
According to the US Department of Transportation, future developments of technologies related to connected vehicles will certainly contribute to make roads safer. Many of these technical solutions for Vehicle-to-Vehicle (V2V) and Vechicle-to-Infrastructure (V2I) communications for safety are already available. Advanced driver assistance systems (ADAS) are increasingly deployed in high-end vehicles, and it is just a matter of time until these life-saving systems become mainstream.
The next evolution will focus on preventing crashes from happening in the first place. This can be obtained thanks to the complete shift in driving responsibility from humans to machines and a consequent drastic decrease in accident occurrence probability.
Safety on the roads opens the discussion regarding Insurance Companies and their business models that are evolving towards so-called Connected Vehicles Insurance.
“Vehicle connectivity is a strategic asset for the entire car insurance value chain, and the industry is just beginning to explore the full potential.”
Autonomous vehicles bring many benefits to insurance companies. Besides reducing both frequency and magnitude of accidents, they allow to reduce costs of locating and recovering damaged vehicles and discourage fraudulent claims. Furthermore, data collected through black boxes, sensors and viability intelligent systems consent to diminish significantly investigative costs for severe accidents. All these factors has the potential to unlock more than $30 billion in crash-related value for passenger vehicle owners, insurance companies, and society every year. Adopting a unified communications platform offers benefits throughout the entire automotive value chain. Insurance companies and insurance telematics providers that embrace the connected vehicle evolution have the potential reduce their cost of operating PAYD services and, more important, can unlock a total of approximately $380 per connected vehicle per year.
So what is happening to Insurance Companies? A profound change of paradigm is happening in terms of business model and value chain management and new value propositions arise. Drivers behaviour is one of the key factors in crashes. Connected vehicles, depending on their level of automation, change Insurance Companies value proposition in two different ways.
“Today, insurance companies that embrace the virtues of connecting vehicles are tracking driver behavior to better calibrate premiums with actual driver risk.”
In first place, models as “pay as you drive” or “pay how you drive” are based on data monitoring and collection, tracking behaviour such as acceleration and speeding to better asses individual driver risk. This is a preliminary change in business model that does not require full automation but only wise used of data.
Instead, full automated vehicles allow to annihilate human factor in driving and this forces insurance companies to move their focus from people to machines.
Obviously, this model raises issues regarding privacy and personal freedom. It is also worth noticing that the trend in accidents reduction badly affects insurance companies’ business model and many disputes regarding responsibility arise, leaving the issue still open.
“Other potential technological changes, such as driverless cars or technologies that facilitate ride or home sharing could disrupt the demand for our products from current customers, create coverage issues or impact the frequency or severity of losses, and we may not be able to respond effectively.”
