Driverless cars are causing a chain reaction that will disrupt the insurance industry.
Now that autonomous vehicles are making their way onto the road, there are some things to consider which maybe weren’t part of the original technology discussion, like, if a driverless car hits you, who do you sue? But that probably won’t happen, because the theory is that autonomous cars will be safer and could reduce the accident rate by as much as 90 percent, according to a CNET article.
Less fender benders, however, could be a disaster for the insurance industry. Now, a new kind of disruption is hitting the roads. According to Quadrant Information Services, a supplier of pricing analytics services to property and casualty insurance carriers, the rise of self-driving cars will mean more people will hail an autonomous Uber than own a car. This is a disruptive moment for the insurance industry. One that will cause an automated chain reaction.
Quadrant’s CEO Michael Macauley points out that insurance is an industry that will be hit particularly hard by automation, and notes that the process has already begun. Fukoku Life Insurance in Japan began replacing some human insurance claims workers with an artificial intelligence system based on IBM Watson Explorer. According to an article in The Guardian, the Fukoku system is designed to scan records and automate the examination of a wide range of data to help the remaining human workers process claims more quickly. Fukoku said the system, which cost $1.7 million, would replace 34 human insurance claims workers, enabling the company to save $1.1 million per year.
Macauley notes that not all technological developments have a negative impact on insurers. According to a new report from MarketsandMarkets, the Internet of Things (IoT) insurance market is expected to be worth $42.8 billion by 2022, growing at a cumulative annual growth rate of 65.9 percent between 2016 and 2022. The report states that the growing adoption of IoT-enabled devices in global positioning systems, built-in sensors and other detectors will increase the need for new IoT-based technologies in the insurance industry to gather data on speed, braking patterns, and other driving behavior. This, along with accelerated access to underwriting and claims management, will drive growth for automobile and transportation coverage in the IoT insurance market.