We live in a dynamic society that is constantly evolving. The challenge of insurance is that it must evolve with us. This requires insurance providers to have their finger on the pulse. From self-driving vehicles to wearable technology, let’s dive deeper into the emerging trends in that affect the future of insurance.
Self-Driving Cars
Self-driving cars are on the cutting edge of technological innovation in practice today. The future seems closer than anticipated with 35 companies working on self-autonomous vehicle technology including Waymo (Google affiliate), Ford, Apple, Intel, Cruise (GM affiliate), and more. This explains why insurance companies are increasingly having conversations about what self-driving vehicles mean for future insurance coverage. How do autonomous vehicles change everything?
First, self-driving vehicles are projected to make our roads safer and reduce the number of collisions by removing human error. They are predicted to decrease vehicle fatalities by 90 percent according to research conducted by McKinsey & Co. Premiums are expected to be lowered by 30 percent as a result of the increase in safety, however there is a flip side to that coin. Due to the highly specialized nature of these vehicles when accidents do occur it is much more expensive to repair which must be accounted for in one’s coverage. It is the role of the insurer to balance these two factors: increased safety and cost of accidents and repairs. Another hurdle of insurance companies is the lack of standardization in safety features and driving patterns in self-autonomous vehicles since most right now are self-assessed internally. This would require insurance companies to assess vehicle by vehicle in place of being able to apply a standard blanket rate.
Liability insurance also proves to be another challenge. With the advent of self-driving vehicles, liability insurance will no longer cover the driver, but rather it will cover the computer system responsible. There is another additional layer to this with having to split liability insurance between manufacturers of the physical vehicle and the tech companies who produce the computing system.
Lastly, a complication for insurance companies is the remaining human element involved in automated technology. Autonomous cars will still be on the road with other human drivers, what are the risks of integrating human decision making and computers in split-second high stakes situations? In times of system malfunction, humans will serve as the back up to the autonomous technology, similar to pilots and autopilot. What kind of decisions will people make on the road when put in high-pressure situations of system malfunctions? These are all things insurers must account for and think about moving forward.
Wearable Technology Data
Wearable technology is also changing the insurance game, with Fitbits and Apple Watches. These devices, recommended by the American Heart Association and the FDA, are worn on the wrist and track your health. These devices can record exercise, heart, and overall health data at different intervals and while doing different activities throughout the day. This allows you to capture an accurate comprehensive picture of your health.
What does this mean for the future of the insurance industry? Wearable technology not only allows you to share health data with your doctor but also with your insurer. This allows insurance companies to get an insight into the health of their clients. The idea is that you can ensure that clients are healthy and active which would, in turn, decrease the likelihood of making claims so you can provide people better rates. This incentivizes a healthier lifestyle, resulting in a mutually beneficial relationship between insurers and the insured. We are already seeing insurance providers adopt this wearable technology data into their coverage with John Hancock releasing more “interactive” policies.
Times are changing and insurance is changing with it. Through the evolution of technology and shifting values insurance providers will continuously have new areas to explore. How will these emerging trends play a role in the future of the insurance industry? We will just have to wait to find out…
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