Changing technology means changes in insurance.
Andrew Aisbett, head of IT at LMI Group did his research for the Honour’s component of his Engineering Degree for driverless cars. He worked on developing the technology that would allow this to happen. His research, while only a few short years ago was at the beginning of what was then just a dream. It may still take some time before it is common place but the advancements in this technology are enormous. I was in a car in Sydney only a few weeks ago that parked itself.
Clearly with these advancements a driverless car is no longer a dream and this will undoubtedly have far-reaching consequences in the insurance industry.
At the time of writing this, driverless vehicles have clocked up over 250 000 kilometres of travel in the United States and it appears that it has been made legal in a number of states as long as a passenger is in the front seat.
If the technology succeeds in being commercialised, the risk factor in motor vehicle transport is likely to be reduced significantly. Motor vehicle accidents are largely the cause of human error and experts believe that the system’s accuracy could help reduce the number of fatalities that occur on the roads daily. This of course is not only good for the motor insurers but also to the health system, the economy and the community as a whole. The transport industry has the most work place related fatalities in Australia.
Reduced risk should mean reduced premiums which although great for individuals and business does have an effect on the investment opportunities for insurers as WorkCover and Motor Insurance both contribute heavily to the income stream of insurers.
Driverless technology will not happen overnight and still has many years, perhaps decades before it becomes common place and it will be interesting to witness the on-going development and roll out. Just as interesting, will be watching the insurance industry come to grips with the ramifications of this exciting new technology.