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Co-authored by Michael Chen and Gary Wang.
Just before the holidays we presented an APEX webinar on autonomous vehicles and their impact on the insurance industry. We would like to thank everyone who was able to participate. We discussed a wide array of topics ranging from platoon formations to legislative actions. We would now like to respond to some of the participant questions we received and share the results from our last polling question.
During the presentation we discussed platoon formations in which technologies create semi-autonomous road trains, where two or more trucks are controlled by a lead vehicle through wireless communication using sensors. Trucks in the convoy are able to drive very close together while constantly maintaining a communication link that allows them to share data and action. For example, if the lead truck’s collision avoidance system activates its brakes, the following truck(s) will do the same.
We received a question about the advantages of platoon formations. The most commonly cited benefit is the fuel efficiency gained from reducing aerodynamic drag. Preliminary studies indicate the lead truck may gain up to 5% efficiency and the following trucks up to 10%. Another potential benefit might be reduced traffic congestion. However, within a mix of platoons and other vehicles, the platoon driver must manage a more complex, weaving environment and we are not certain the formation could be maintained without a networked environment between all vehicles on the road.
Another webinar participant asked how auto manufacturers insure for liability in the event of an autonomous vehicle collision. Elon Musk, CEO of Tesla, has stated that Tesla does not consider itself legally liable in a crash involving its driverless vehicles unless it is caused by something inherent to its design. Tesla’s position is that its current system is not autonomous, but driver assisted. The driver is, therefore, ultimately responsible for controlling the vehicle. Tesla’s recent fatal crash case is still open and may shed some light as to how the courts will assign liability.
We ended our session by asking the audience, “How do you see your company handling the influx of autonomous vehicles?” The majority responded that they are either researching the issue or opting for a wait-and-see approach. A small number of participants indicated their companies are developing new rating variables and new insurance products.
While the insurance industry’s ultimate response to autonomous vehicles is not yet clear there are a few certainties.
Autonomous vehicles are no longer science fiction but reality.
Autonomous vehicles are expected to reduce the frequency of crashes.
As autonomous vehicle technology becomes more prevalent, insurers will be able to better determine the impacts to both frequency and severity.
Current and future case law will continue to shape our understanding of product liability in terms of autonomous vehicles.
Michael K. Chen, FCAS, MAAA, is a Consulting Actuary with Pinnacle Actuarial Resources, Inc. in Des Moines, Iowa. He has 12 years of actuarial experience in the property/casualty insurance industry. Mike has extensive experience in assignments involving pricing and product management and loss reserving, with considerable experience in loss cost projections, development and monitoring of key metrics, management reporting, and trend analysis. He currently serves as a member of the CAS Examination Committee and the Committee on Professionalism Education.
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