Anything but Simple

At a macro level, improved car safety technology over recent decades has resulted in a reduction in accidents and claims costs. The path to autonomous driving, where the car drives itself, looks set to continue this trend. However, that decline in accidents and claims costs will see some significant bumps along the way.

For the purposes here, simple autonomous vehicles are defined as any vehicle that requires a driver for part, but not all, of its operation. This definition includes vehicles that cannot drive themselves in all scenarios, but can take on some driving tasks.

Technologies now exist that allow cars to perceive the road and objects around them and react on behalf of the driver. Typically, most of these technologies only intervene if it is clear that the driver will not, but intervene they can.

TEST DRIVING NEW TECHNOLOGY

A new set of technologies that actively aid the driver are being developed now, and some are seeing early signs of adoption. These technologies come under the broad heading, advanced driver assist systems (ADAS). Many of these systems listen to information from the infrastructure – from the road and other road users – in order to influence the behaviour of the vehicle.

The technologies fall into two broad areas: road or external monitoring; and driver monitoring.

The former is principally concerned with identifying obstacles or markers outside the car. These systems could alert the driver or alter the behaviour of the vehicle (for instance, cause it to brake or adjust speed).

Driver monitoring technologies

Driver monitoring technologies are relatively new and generally try to identify fatigue or some other incapacity to drive. Some systems seem to identify the driver and limit his or her behaviour (for example, setting a limit on the car’s speed if the driver is young or less experienced).

Adaptive cruise control

Adaptive cruise control (ACC) systems build on cruise control systems that allow a driver to set a target speed. Adaptive systems will automatically vary the speed of the vehicle to ensure that a minimum safe distance is kept with the vehicle in front.

Autonomous emergency braking (AEB) and forward collision warning (FCW) systems are part of ACC systems and are being installed as stand-alone systems in some cars. In this case, the system will respond to the threat of an imminent frontal collision.

Some AEB systems will stop the car prior to a collision and claim to be able to prevent pedestrian impacts (if travelling at a slow enough speed).

Side object detection

Side object detection system (SODS) or perhaps more commonly, blind spot monitor (BSM) systems, use radar, lidar (light detection and ranging), and other sensing technologies to detect objects in known blind spots for the vehicle.

As with collision-warning systems, both the National Highway Traffic Safety Administration and EuroNCAP are highlighting vehicles with lane-departure warning capabilities in their safety assessments.

SIX REASONS TO WATCH FOR SIMPLE AUTONOMOUS VEHICLES

1 Technology failure

“The car didn’t stop itself!”

All technology fails eventually. That being the case, what happens when people are still responsible for driving the car, but most of the braking, starting and maintaining a safe distance is done automatically by the vehicle?

It is only natural for drivers of vehicles with these advanced safety features to grow accustomed to their presence. The question then becomes, “As these technologies become ubiquitous, will the driver intervene when necessary?”

2 Safety feature repair costs

“How much? It was only a little bump.”

The sensor array required to enable ACC and FCW costs around US$2,000 and is frequently housed in the bumper or front grill. Some studies suggest that these technologies increase the number of same-direction collisions (fender benders), since the automatically stopping car does so abruptly.

Having sensor arrays in the front grill or the front bumper puts them directly in harm’s way from these common, typically low-cost events. Insurers must consider these shifts in cost in their attitudes towards these features and their communication with customers.

3 Driver ability to assess risk

“I didn’t think I could crash.”

In short, the driver is the great unknown in simple autonomous vehicles. As the car keeps itself in lane and prevents forward collisions, will the driver remain attentive, or will it become common to see drivers reading a book while travelling down the highway?

When drivers are engaged with the task of driving, what assumptions will they make about safety technology as a safety net, and what risks will they be willing to take? How will low-risk driving affect driving capability, and how should insurers respond?

4 Deliberately distracted drivers

“I was checking Facebook when an advert popped up.”

There are a few trends that are contributing to this issue: the app-enabled and connected car; local business models and mobile advertising; and lower perceived risk in simple autonomous cars.

At the 2011 Consumer Electronics Show event, Chevrolet, Ford and BMW all had app-syncing features in their new cars using MyLink, AppLink and ConnectedDrive.

5 Driver alerts or driver distractions

“Well, first my seat started vibrating, then there was this alarm…”

There are a variety of alerts that a vehicle can offer to its driver – vibrating seats, vibrating steering, heavier steering, audible alerts of different types, visual alerts and even the vehicle taking over driving. As these technologies see broader research and wider adoption, there may be some standardization in approach, but in the meantime, drivers potentially face a torrent of idiosyncratic alerts telling them how to drive.

6 Reduced perceived value of insurance

“Why do I need insurance again?”

The requirement for car, auto or motor insurance is enshrined in law in most Western countries. As cars move from becoming safer to almost uncrashable, drivers will question the need for insurance.

The principle outcome of this technology will be that the insurance industry could lose that contact point with the driver, which may well affect sales of other personal lines products. The effect may be less marked in the commercial insurance market, but that market would still be changed.

MOVING FORWARD

Advanced safety technology and self-driving cars are set to change the automotive industry forever. There is no doubt that these technologies will result in a reduction of road injuries and road deaths, but this level of cultural change in Western countries is not without risk – risks that car owners and drivers may not recognize.

The number of accidents, their severity and the costs incurred will be determined not only by the car and the driver, but also by a new force – the software involved in driving the car. Where possible and where allowed, insurers must take this into account in both their underwriting processes and claims handling.

Modern vehicle safety technology is increasingly interfering with driving. The human driver and vehicle control software will be driving cars in the near future.

The overall effect will be positive, but there are new risks that insurers must monitor and factor into their strategy, namely accepting that safer cars better hide some subtleties, as well as considering the displacement of costs in terms of alternative accidents and increases in repairs.

For now, however, insurers are advised to look for displacement of accidents and correlations with these new technologies, and build knowledge and engage with drivers regarding which technologies work, which have unforeseen impacts, and how these might be mitigated.

In addition, as the insurance industry moves to wider adoption, look for systemic effects such as the following:

• distracted driving could become the norm;

• as manual driving becomes the minority case, there will be new behaviours on the roads and new risks; and

• how should insurers advise customers – both those in new cars and those in old ones – to mitigate their impact?

To execute this analysis well, insurers may soon need to understand both the hardware and software status of these new safety features in the vehicle.

Finally, for some insurers… pick the right time to exit the auto insurance industry altogether.