This was the alarming, yet serious question I was asked to consider for a firm testing new self-driving truck technology. With the market set to grow massively in the next decade, the transition from development to business as usual will present us with new challenges and opportunities.
We have been following the developments in the self-driving market closely. We reported on the first autonomous delivery of beer in the USA, Smart Park technology and how ‘platooning’ groups of trucks in a fleet can save both fuel and reduce risk.
The latest reports predict that the global autonomous vehicle market will grow by 40% by 2027 and be worth an estimated $127 Billion. It is also expected that this will be underpinned by fundamental changes in software and Artificial Intelligence (AI).
If that were not evidence enough of the disruption the trucking industry faces, the arrival of Google, Uber and Tesla over the horizon would suggest that a huge shake-up is imminent.
What will this mean for the insurance market?
Clearly, we will have to be nimble and awake to the fundamentals of how we view risk. It will simply not be good enough to look back on the old underwriting landscape.
Three considerations to address:
- The term hybrid will take on a new meaning as it will apply to the mix of people on the roads along with autonomous vehicles. In between this, as we have seen with Volvo trucks there will be another overlap with semi-autonomous vehicles. Quite a mix of liabilities in terms of risk, liability and negligence. Fault could be a mix of human error, software and possibly providers along the supply chain. For example, will the original supplier of the technology rather than the manufacturer be liable?
- Regulation will change. At a macro level, legislation will need to keep pace and each jurisdiction and geography could take a different stance. This will have an impact on the insurance industry and the products that we offer. For example, could there be a growth in pay-per-use as the driver for pricing risk?
- It is reasonable to believe that as autonomous technology grows, there will be a reduction in accidents and risk. However, looking back on past underwriting history will be of little use in assessing risk and pricing. For example, as the human risk reduces and disappears it will be replaced by systemic risks such as software failings and even cyber-attacks. So rather than considering the failing of an individual person driving a truck, the risk may be a blanket one across a whole fleet.
At White Oak Underwriting, we are certainly up for the challenge and will adapt to the changes we face. If you would like to discuss the questions raised by this article please get in touch with your local broker.