Page 32 - EQ Mag-issue 5
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INSURANCE RESOURCE (Cont’d)
Though more recent data from the IIHS and Highway mom is in the car, if dad is in the car, or one of the kids,"
Loss Data Institute (HLDI) found decreased property Ruiz says. "It can tell if you're stopping too short or
damage liability and collision claims for cars equipped drifting in lanes, and it knows exactly who's doing it
with forward-collision warning systems, especially and whose premiums should be affected."
those with automatic braking, there is still a gap
between the safest and least-safe models, with small But does that necessarily mean that auto insurance will
lower-cost models still considered risky. be cheaper overall?
"Safety features have been shown to reduce the risk of
losses in liability coverages and that will result in a Ruiz notes that insurers may place more emphasis on
benefit to the insured," Travelers spokesman losses that aren't caused by crashes, but by wind,
Gulbrandsen says. "However, as more technologically- floods, hail, and other natural elements and by theft.
advanced safety features have been added to vehicles, That comprehensive coverage may not be so bad if the
the cost to repair them has generally increased." potentially higher costs to repair or replace damaged
vehicles are more than offset by the lower accident
This is where it starts to get tricky for drivers. Insurance frequency rate.
is regulated differently from state to state, so what However, just know that insurers like Accenture see
drivers pay in different areas of the country depends of comprehensive coverage and new insurance categories
what that state deems important. Meanwhile, — including cybersecurity insurance (hacking), product
autonomous features begin to shift liability for crashes liability insurance (faulty sensors and algorithms), and
toward auto manufacturers and away from drivers, public infrastructure insurance (hi, potholes) — as an
which may make them take the RAND Institute's "$81 billion opportunity" as soon as 2025. In fact,
suggestion and push for no-fault insurance. Accenture and the Stevens Institute estimate that
cybersecurity insurance premiums alone could bring in
Finally, there's a chance that insurance underwriters will an extra $61 billion during the next six years.
stop simply suggesting that drivers use pay-as-you-drive
or usage-based programs like Progressive's Snapshot or Even that scenario, however, assumes that drivers are in
Liberty Mutual's RightTrack. Those programs use small any rush to adopt autonomous vehicles, never mind the
sensors installed in a car's dashboard or an existing on- safety features available today. Insurance Quotes'
board communications system (think OnStar) to track survey found that just 32% of people trust current self-
driving habits and reward less risky behavior. While driving technology. While 47% expect to have more
some of these sensors track only the miles you drive, faith 10 years from now, when that technology evolves,
others can use a car's safety features and telematics only 37% would consider leasing or owning a self-
systems to determine how often you slam on your driving car. That ranges from 52% of those 18 to 34 to
brakes, and good drivers can get discounts of 5% to just 22% of those 65 and older.
30% if these devices—or even telematics systems or
smartphones — like what they see. That reluctance is why Stevens estimates that by 2035
"After analyzing Snapshot driving data, we've found there will be only 23 million autonomous vehicles on
hard braking to be one of the most highly predictive American roads — or less than 10% of the total cars on
variables for predicting future crashes," says Dave Pratt, the road today. It's also why a white paper released by
general manager of usage-based insurance for Travelers suggests that auto insurance shouldn't look
Progressive. "We know that one of the main much different when autonomous cars become more
contributors to hard braking is tailgating, so we're prevalent, with drivers simply assuming less risk under
using our data to help drivers be as alert and aware as traditional auto insurance. Meanwhile, both insurers
possible on the road." and drivers will be watching both advancing
technology and decreasing premiums closely.
The National Association of Insurance Commissioners
(NAIC) predicts that 20% of all U.S. auto insurance "Through our leadership role in collaborative, multi-
companies will incorporate some form of pay-as- industry research, as well as analysis of our own data,
you¬drive program by 2020. The Insurance Information we expect to learn more about the potential impact of
Institute, meanwhile, says 70% of insurance carriers will this technology on costs," says Sevag A. Sarkissian, a
be experimenting with that option by that time. Ruiz spokesman for State Farm whose region of coverage
says that despite the reluctance of older drivers to be includes automated vehicle testing grounds in
monitored, younger drivers who are more comfortable California and Nevada. "If loss experience ultimately
with technology may push the change. "You can tell if improves, rates could reflect that fact."
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