April 27, 2015 by Jason Contant, Online Editor
Autonomous vehicles (AVs) will lead to a major disruption in the auto insurance sector, affecting the industry’s entire business model, suggested a speaker at the Insurance Telematics Canada 2015 conference on Friday.
Barrie Kirk, executive director of the Kanata, Ont.-based Canadian Automated Vehicles Centre of Excellence, told attendees that AVs will be fleet-owned, so there will be a trend away from individual ownership of cars. “And therefore, your whole business model, based on the majority vehicles being owned by individuals with their own policies, that will disappear as well,” Kirk said during his presentation, entitled The connected car drives insurance of the future. “[That] will lead to a major disruption in your industry.”
The session was moderated by Jim Kenzie, chief automotive reviewer with the Toronto Star’s Wheels section and featured Kirk as a speaker, along with Alex Veilleux, vice president, Ajusto & Innovation, with Desjardins and Robert Gruszczynksi, ODB communication expert with the Volkswagen Group of America.
“We are about to see the end of the auto insurance industry as we now know it,” Kirk said during his presentation, pointing to three factors. The first is that driver behaviour becomes a non-issue once computers are operating self-driving cars. “Second, computers will be much safer drivers than humans so the number of collisions will go down… the premiums will go down and you will see your market shrink,” Kirk said. The third reason is the arrival of so-called “transportation as a service,” he said. “Automated, driverless taxis that will take you where you want to go, with the convenience, similar to the convenience of owning your own vehicle, at a much lower cost.”
Kirk predicted that by 2020, a number of major cars’ original equipment manufacturers are forecasting that they will have fully self-driving cars. “2015, this year, partially autonomous vehicles are already commercially available – cars that can drive on highways with intelligent cruise control and lane centring, pedestrian avoidance and self-parking, all these things,” Kirk said. “There also trials going on at the moment in various countries with fully autonomous vehicles.” By 2025, the majority of the vehicles on the road will be AVs, he suggested.
Gruszczynksi noted that Volkswagen already has both of the 2015 and 2020 models – with adapted cruise control, braking, intelligent steering and lane centring. “Right now, we are already working on model 2019 and 2020 year cars,” he said. “They look not too different and drive not too different from what you are driving today. The current average lifespan of a vehicle, fleet average age of a vehicle, is 11.4 years, so you’re breathing into that 2025 timeframe, just on your average age of the vehicles today.”
Of potential concern in the future is a “mixed” environment, where there are human and computer-driven cars on the same road at the same time. “Human drivers like to play games with computer-driven cars,” Kirk suggested. “If you are driving down the highway and you see an AV, humans like to be aggressive and pull right in front of the computer-driven car, knowing that the computer is defensive and will in fact slow down and let you in. We don’t want to see computer-driven cars making humans more aggressive and more dangerous and that unfortunately will happen, but we want to try and minimize that,” he said, adding that he suggested to the Ministry of Transportation of Ontario during a consultation session that there should not be special signage on AVs identifying them as such. “We want to try and make an AV as much like a human driven car as possible to avoid that kind of bad behaviour.”
Kirk suggested that early adopters of self-driving vehicles will be seniors and disabled people as well as millennials. Middle-aged people, many of whom got their drivers’ licence as a “rite of passage,” will find it really difficult to let go of the steering wheel, he argued.
More coverage of the Insurance Telematics Canada 2015 conference