WIN Magazine - Spring 2016 - (Page 36)

FEATURE AUTONOMOUS VEHICLES: CONSIDERATIONS FOR PERSONAL AND COMMERCIAL LINES INSURERS S INCE THE EARLY 1960s the insurance industry has been a major force behind the most significant advances in highway and vehicle safety, including electronic stability control requirements, seat belt use and automobile crash worthiness. Now, accident avoidance and autonomous vehicle (AV) technologies offer an opportunity for us to advance another milestone in vehicle safety, going beyond keeping people safe in a crash to avoiding the crash altogether - saving lives, reducing injuries and having a significant positive impact on the human and economic toll of accidents. Data from tests conducted by IIHS show vehicle safety systems that are considered the building blocks of fully autonomous vehicles have been successful at reducing accidents. At the same time, AV technology could give rise to new and potentially costly liability exposures with characteristics that emerge along with the technology's evolution from partially to fully autonomous. Will the tools and methods underwriters use to evaluate risk evolve also? What new products will be needed, both for traditional auto manufacturers and suppliers faced with new risks and for new entrants into the AV supply chain? When will these changes occur and how will auto insurers adapt? WHAT ARE AUTONOMOUS VEHICLES? Autonomous vehicles typically use a combination of sensors, cameras, GPS, radar and LIDAR technology to gather data that enables the vehicle to know where it is located and its proximity to everything around it. The data is processed by an on board computer which "drives" the vehicle. The National Highway Traffic Safety Administration (NHTSA), describes five levels of vehicle automation, from no automation at Level 0, to full self-driving capabilities at level four. While level four technology is in various stages of testing, most vehicles on the road today fall into the level two category. Some luxury cars 3 6 | v i e w t h i s i s s u e a t | BY MAUREEN BROWN offer automated level three-type functions such as automatic lane-keeping and forward collision avoidance systems in production models today. SIGNIFICANT SAFETY AND ECONOMIC BENEFITS NHTSA reports that in 2014, more than 32,000 fatalities occurred in the United States as a result of vehicle crashes, with human error as a primary cause.1 Analysts agree that AVs have the potential to dramatically reduce human error and, therefore, the frequency of vehicle crashes. In addition to accident-related costs, AVs may have other significant benefits from fewer cars on the road, more efficient driving and increased productivity. While savings estimates vary widely, Morgan Stanley values savings at US $1.3tr, which includes nearly US $500bn of accident-related costs, US $169bn in fuel-related savings, and US $645bn in productivity gains.2 Autonomous commercial vehicles could also significantly reduce the 3,900 traffic fatalities involving large trucks annually in the US that are attributed to driver fatigue or error.3 Independent testing agencies confirm that autonomously driven tractor-trailer combinations can reduce congestion, emission, driver fatigue, vehicle downtime, and maintenance costs. An estimated 4-7% reduction in fuel costs could add up to significant savings, considering fleets

Table of Contents for the Digital Edition of WIN Magazine - Spring 2016

Surviving the Cyber-Liability Avalanche: How Contracts with Business Partners and Vendors Expose Companies to Cyber Liability
Data and Analytics: Another Dimension to Underwriting in the Specialty Insurance Market
Embracing New Technologies & Attraction Marketing Strategies
How the Cloud Levels the Playing Field for MGAs
Staying Agile in an Era of Disruption
Standardizing the Non-Standard Industry: E&S Working Group Champions Automation and Efficiencies
Using Technology Communities to Foster Innovation in the E&S Wholesale Distribution Model
Autonomous Vehicles: Considerations for Personal and Commercial Lines Insurers
AAMGA 2016 HeatMap of Emerging Issues and Trends: Challenges and Opportunities for the Specialty Insurance Industry
A Personal Note on Leadership: There’s Hope in the Young
In the WIN-ner’s Circle: Jim Mastowski and Coryn Mastowski Thalmann of Jimcor Agencies
Index of Advertisers

WIN Magazine - Spring 2016