Insurers Aren’t Prepared for the Future of Transportation – Learnings & Wrap Up

“Insurers are not prepared to seamlessly integrate with the future of transportation.”

This was one astounding conclusion that our project team came to at the end of our 4-week sprint. Through 16 days, 11 participants, 5 companies, and 4 partnerships, we inferred that the auto insurance industry needs to move quickly to adapt to the shifting change in risk.

And although the project team had originally determined 2050 as a placeholder date for the mass adoption of fully autonomous vehicles, through the course of the sprint, two problems became apparent:

  • The anticipated date of 2050 is in fact, too far out
  • Insurers are not ready for this disruption

Our Proposed Solution

To tackle both of these problems, the team created a portfolio solution with the following three elements:

  • Discovery and Awareness Portal
  • Adaptive Risk Model
  • Transportation Short Leasing/UBI Application

The ultimate goal of these three elements is to provide a comprehensive solution for auto insurers while providing a user-friendly experience for the average driver. 

1. Discovery & Awareness Portal

This portal will address the safety concerns of the customer by providing a manufacturer agnostic resource where customers can learn and experience what it’s like to be in an autonomous vehicle. 

2. Adaptive Risk Model

This risk model will take into account the transition period (or the “messy middle” environment) where customers will be driving vehicles that have some autonomous features, but are not yet fully autonomous. 

3. Transportation Short Leasing/UBI Application

 This application is aimed towards consumers who do not own a vehicle, but still require transportation. This is intended to be more financially appealing than taxis and this type of broker for autonomous transportation is projected to become more relevant over time. 

Next steps for the Autonomous Vehicle Project Team

In addition to the above deliverables, the team produced a business case that outlined how the sustainable business model, which was presented at the team’s final presentation. The final valuation of all of these products was a whopping $150 MM.

Immediately following the presentation was a next steps session where the audience and project team discussed how to bring the proposed MVPs to market. The following priorities were identified to be further defined in 2018:

  • Getting buy-in from regulators for these new insurance models
  • Creating partnerships with manufacturers
  • Communicating the value of autonomous vehicles to consumers
  • Creating insurance for pay-per-ride insurance
  • Creating and refining the steps to aggregate information 
  • Designing an operational plan (how to make the $$)
  • Bringing e-call (automated emergency calling) to Canada
  • Collaborating with private and public sectors to improve safety in the transition period
  • Creating data privacy guidelines
  • Standardizing AV guidelines
  • Creating a risk model 

Want to get in on the action?

Although our initial project sprint has ended for the Autonomous Vehicle team, it’s not too late to become involved with the next steps of this project! Make sure you’re a part of our next phase by becoming a member of Cookhouse Lab in 2018! Our introductory membership prices are ending in Q1 of 2018, so the time is now.  

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The Future of Transportation, Autonomous Vehicles: Project Update

Most manufacturers have announced plans to bring semi-autonomous vehicles to the market by 2020, but would you take your hands off your steering wheel while driving 100 km/h? 

How would insurers determine risk if drivers continue to have less influence on the control of vehicles? 

How would you behave if you were driving next to an autonomous vehicle? How will the relationship between auto insurers and manufacturers change when this technology is widely implemented? 

Here is a glimpse of the project team’s progress so far. 

Our problem statement

Throughout this project, our main goal has been to explore how drivers will react to the boom of autonomous vehicles. The team’s mid-project problem statement has been iterated to:

“Drivers today are uncertain about the adoption or transition to autonomous vehicles”.

Focused on the barrier mentioned above, our conclusion is that the quicker drivers adopt autonomous vehicles today, the faster society can get past the “messy middle” transition period where vehicle collisions are projected to increase before dropping significantly when fully autonomous are widely adopted.

Hypothesis on the overall risk for auto insurers

90% of collisions today are caused by human mistakes.  A future with only partial adoption of autonomous vehicles would see the risk for auto insurance increase, given the uncertainty of how human drivers would react to self-driving behavior.

The hypothesis made was that the overall risk portfolio for auto insurers will reduce with the further adoption of self-driving capabilities. 

One of the forerunners in autonomous vehicles is Tesla Motors, who introduced their auto-pilot autonomous technology in 2015.  Tesla recently partnered with AVIVA in Canada to launch their joint InsurMyTelsa offering. It will be interesting to see how insurance companies interpret risk as more autonomous vehicles hit the road. 

Cookhouse Lab experiences the future of transportation at GM

Exploring the evolving relationships between insurers and auto manufacturers, the project team set up an experiential day with GM to learn more about their semi-autonomous Cadillac CT6.  The team wanted to explore potential partnerships that would allow for collaborative efforts to make driving safe while providing drivers additional peace of mind. 

Working towards a minimum viable product (MVP)

With insight from one of the main auto manufacturers, the project team is looking to iterate on their minimum viable product to incorporate the following:

A new and adaptive multi-factor autonomous vehicle risk rating that would have a dependency on the level of autonomy adopted

The valuation of the proposed solution to evaluate business viability

New ownership models that would move the autonomous vehicles conversation to autonomous transportation

In the 1960’s, the Jetsons graced the small screens of families around the world.  Although I wasn’t around for the initial broadcast, I was fortunate enough to watch reruns.  I didn’t own a car or even a license, but I was fascinated by how Elroy, the young boy on the show, was able to travel throughout his day without the need to drive.  Elroy was able to do this by utilizing self-piloted personalized pods.  Close to 60 years later, we are finally on the verge of significant self-driving capabilities in vehicles but there are still some intrinsic barriers in place and many questions to answer. Stay tuned for our final project MVP! 

Project Participants

  • Munich Re
  • KPMG
  • Wawanesa Insurance
  • The Co-Operators
  • RSA
  • IBC

Subscribe to our newsletter to find out the final outcome of our autonomous vehicles project. 

Want to join in on the innovation action?! Check out our upcoming innovation projects below:

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The Effect of Autonomous Vehicles on Insurance

What if I told you that in just twenty years, it is estimated that there will be 23 million autonomous vehicles on highways in the US?

How does it make you feel? Uneasy? Excited? Both?!

The technology for autonomous driving has arrived. And with that, change is inevitable. Here are some of the ways this technology will shift the insurance industry:

Premium Shifts

When buying auto insurance today, accident liability rests on the driver of the vehicle. So what happens when the driver is removed from this equation? While many debate that the accident rate will drop once autonomous driving is widely implemented, it’s impossible to presume that this rate will be reduced to zero. This means that accident liability still exists – but will shift away from the driver.

In the UK, the Department of Transport has unveiled a plan for two-in-one insurance products for autonomous vehicles. This product covers both the risk of the motorist when they’re driving and the car when it is in autonomous mode.

Scott Mclaren, Executive VP and Chief Marketing Officer of Fortegra, explains an alternative possibility where premiums could be passed off to other parties including the auto manufacturer, software designer, or even the government.

Regulation Shifts

As society norms shift with the usage of autonomous vehicles, the terms used in insurance today could become fuzzy. This, in turn, will necessitate a shift in regulations.

What is considered to be negligent driving today will be radically different from what is considered negligent driving with an autonomous vehicle. For example, taking your eyes off the road while driving today would be extremely dangerous and considered negligent, but will this still apply when the car is automated? 

Product Shifts

As more people start to use autonomous vehicles, new products will need to be introduced to complement their usage.

An example of this is cyber-insurance. Autonomous vehicles are connected devices, and as such, they will need to be protected against the same threats that computers face. These threats include something as simple as a system error to something more severe like a criminal or terrorist hijacking – which will be a new avenue that underwriters will need to explore.

Infrastructure is another avenue that needs to be explored. As the responsibility of driving shifts away from the driver towards artificial intelligence, the data that is uploaded for analyzing will increase. This means that servers will also need to be insured.

Change is coming to the industry, and the earliest movers will have the most to gain. If your organization wants to be a part of this movement, co-create with us on our upcoming autonomous vehicle project

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