1. With many companies (Tesla, Volvo, Google) introducing their prototypes of driverless vehicles, when do you predict them to actually enter the market and start directly affecting the insurance world?
It will be a gradual and steady process. To see an effect on the insurance world, we do not need to wait for driverless cars and it will take a long time before driverless cars are allowed on the majority of roads. Now, we are living in a "new driving" world, with many of our cars being assisted by some level of automation.
We already now see that advanced driver assistance systems (ADAS) reduce accident frequencies. We estimate that by 2020, sophisticated ADAS (such as emergency brake assist) will already reduce overall accident frequencies by over 4%. With further automation and adoption in the overall car fleet, this effect will increase. As for fully driverless vehicles, several car makers have announced the launch of a fully self-driving vehicle between 2020 and 2025.
2. What are the particular impacts of driverless cars on the insurance industry, including underwriting?
ADAS features and autonomous driving technology are disrupting the motoring world and making driving much safer. Fewer accidents will likely lead to lower expected losses for insurers, which in turn should bring down overall motor insurance premiums. Due to the increase in number of vehicles (China, India, etc.), we see global insurance premiums continuing to increase. However, as of approx. 2025, total insurance premiums in developed markets will slowly start to decline, according to our projections. The average premium will decline as well.
As far as "UW" aspects are concerned, to accurately insure policyholders that own automated vehicles, an insurer will need to know which autonomous features the car is equipped with, how effective these features are and how often and where the driver uses these features (e.g., autopilot). To determine whether the driver or the system was driving in the case of an accident or to give a premium discount for utilizing ADAS, insurers will need to be able to interpret telematics data coming from an automated vehicle. This in turn will determine which insurance policies might be triggered, i,e,. motor third party liability (MTPL) or product liability cover.
3. To what extent do you think the legislation will have to be modified with the rise of autonomous vehicles? with the rise of autonomous vehicles