Drivers will face differing levels of technology, which could lead to confusion and even accidents
Tesla’s recent announcement that it intends to ‘go-it-alone’ for its InsureMyTesla service, and break from traditional insurance, was another confirmation that with vehicle technology a lot of the automotive-insurance business silos are shifting.
The concept of insurance-as-a-service continues to gain traction – the shift to carpooling, subscribe-and-drive, car sharing, to B2B insurance relationships from B2C – and there’s been similar statements from Ford, Volvo, BMW, Renault, Mercedes-Benz and Waymo/Google amongst others who all have in-house insurance packages and subscription packages of some kind.
So no doubt something big is happening on the road to semi-autonomous and eventually fully-autonomous vehicles. Cars are becoming more interconnected to other aspects of daily life: they’re safer but much more expensive to repair when something does go wrong.
At the heart of the issue is the increased digitization of the car companies themselves and the increased role that ADAS (Advanced Driver Assistance Systems) play in determining safety and risk.
For insurers there’s a lot of competitive knowledge yet to be gained from the new vehicle technology. For vehicle OEMs it’s about creating a beautiful experience in and around the vehicle, around the dashboard, and creating loyal customers.
And yet with so many names for features like Blind Spot Warning, Lane Assist, Parking Assist, Automated Emergency Braking (AEB), BLIS, ABS, City Safety it’s no wonder that the average consumer is confused. Consumer education and confidence is key and as a Thatcham Research report identified, there is a grey area right now in the handover, between what the typical driver believes these features can do, and what they can actually do.
Questions in the human-machine interface
Automated driving is expected to bring huge societal benefits, including a reduction in road casualties, as well as cuts in emissions and congestion. But there will also be risks as drivers will be faced with differing levels of technology with different functionality. This may lead to confusion, which in turn could lead to accidents. The research to date has helped to clarify the dividing line between assisted and automated driving, for specific parking, city and other usage domains as yet unknown, into the following categories:
- Assisted driving, partial automation (SAE Level 2) Driver remains responsible
- Assisted driving, conditional automation (SAE Level 3) Driver remains responsible, car takes control of steering and pedals
- Automated driving, high automation (SAE Level 4) Car takes control
- Automated driving, full automation (SAE Level 5) Car takes control, no driver need be present (with no steering or pedal controls)
Challenges for drivers and insurance providers
The biggest challenges posed by ADAS technology and assisted driving for motor insurers are that:
- New types of collision could occur when a car is providing a high level of assistance and the driver may not be sufficiently engaged to respond to a hazard
- ADAS features may work differently in different vehicles, creating driver confusion which could lead to a collision.
To respond to these challenges, the insurance industry needs absolute clarity on how to define the effectiveness of these technologies, and how to assess risk in the spectrum from assisted driving to automated driving. Some 60% of the global vehicles currently on the road have some form of ADAS and it’s a technology growing in importance.
EU plans to mandate certain safety systems including AEB, alcohol interlock and intelligent speed limiters on all new cars from 2022 (the so-called Third Mobility Package) will raise the stakes for insurers seeking to manage risk and identify new risk profiles from the myriad vehicle makes and models.
On the road to greater vehicle autonomy, more rating factors for insurance are going to be coming from vehicle technology and vehicle history data, and not just the ‘person risk’.
Our LexisNexis® research from the US showed that safety is the most understood and most popular aspect of ADAS (for 80% of drivers). This is followed by the prospect of cheaper insurance (52%), making driving less stressful (43%), increased driving efficiency (40%) and making driving easier (37%).
At LexisNexis® we’ve made some forecasts on how this will evolve over time and we’re getting ready to launch a series of score models and risk attributes in the UK and other markets, the ADAS Data Report, ADAS Score, Base Score and the Vehicle Score. We’ve analysed the impact of some specific ADAS technologies/sensors on accident frequency, based on LexisNexis Risk Solutions research from 12 million vehicles.
Vehicle technology and the associated data insights are going to have a positive effect on insurance underwriting and pricing. From the connected car we will begin to get additional new data sources for insurance. These include the performance and the effect of these safety features in the real world, with all the various brand names and installation types that are out there in the market, as well as the frequency with which these individual features are being triggered per mile. This in turn is going to feed back into insurance pricing.
There are clear benefits for the consumer in the form of (usually) insurance premium discounts, a better overall vehicle experience, and insights of geographic use and other usage patterns that are going to be needed to drive new usage-based services for the automotive OEMs as well as insurers. There’s still a lot of work to be done explaining to the public the benefits, and what it really means for them. It’s going to take a cross-industry effort.
LexisNexis Risk Solutions, a unit of RELX Group, is a global data technology and advanced analytics leader, with customers in over 100 countries worldwide.