At a one-day conference in London on Britain’s Smart Cities, attended by the Mayor of London, Boris Johnson and Ed Vaizey MP (Minister for Culture and the Digital Economy, Department for Culture, Media and Sport), AXA UK’s Head of Underwriting, David Williams, spoke about the huge potential impact of driverless cars on society. He commented that driverless vehicles are no longer a concept for Hollywood films, but are almost a reality, and pose many opportunities and challenges for the insurance industry in the future.
Recent research by KPMG suggests that semi-autonomous vehicles (where you can take your hands off the steering wheel) will be commonplace by 2025 with fully autonomous vehicles coming to market around 2030. Technology is advancing quickly and insurance companies are providing the framework to make it usable, despite often not getting the credit they deserve for their constant evolution. Across the board data, connectivity and the internet of things have changed how we look at the world and, crucially for insurers, how we interact with it.
Today, there are around 35 million vehicles on the road and insurers pay out £27m every day in motor claims. It is also a fact that 90 per cent of all accidents on the road are caused by human error, a major risk factor considered in the pricing of premiums. A lot of the success of driverless cars hinges on them delivering on the safety aspect, with early research [from Thatcham] suggesting that the adoption of autonomous emergency braking (AEB) has led to a reduction in third party damage crashes and injuries by 15 per cent and 18 per cent respectively.
Cost savings beyond just insurance premiums, are also an important consideration of the impetus towards driverless cars being adopted. A recent study undertaken by AXA UK has found that there would be significant economy-wide business and consumer advantages with the advent of automated or ‘driverless’ haulage and logistics vehicles, including delivering nearly £34bn in savings to the haulage industry. The report, The Future of Driverless Haulage, found that when considering the anticipated cost savings across four cost categories (labour, fuel, insurance and vehicle utilisation), there would be an estimated £33.6bn of savings – and potentially as high as £47.5bn – after 10 years. If passed on, that would mean £150 of savings on grocery spend per household.
However, the industry is faced with a number of challenges with driverless cars, particularly the issue of who is responsible in an event of a collision - the person or the car? Practically, clarity is need on whether sensors and telematics can accurately record when the driver hands over control to the car and vice versa. This is a challenge and one that needs to be overcome but ultimately the overall benefits and potential positive impact on society from these vehicles are too great to ignore.
As part of his summation, David Williams, Head of Underwriting, at AXA UK, said: “Driverless vehicles are a challenge for the insurance industry but this technology does have the potential to revolutionise people's lives for the better. Britain's smart cities can be the starting point and the ultimate enabler. The UK has a fantastic export in the British legal system; and also the most sophisticated insurance market in the world. The world will, to a large extent, be looking at how we deal with the legal and insurance implications that this and similar technologies pose.
“All of those are reasons why AXA is excited to be playing a leading role in this area. We do see our role in society as protecting people today and investing in their future and the advent of driverless cars allows us to do both at the same time.”
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