There was a fascinating article in the WSJ the other day about the impact of driverless cars on Insurance.
“WSJ’s Theo Francis joined the MoneyBeat show this morning to talk about how insurance companies and car-parts makers are already talking about the threat from driverless cars. It’s years off, to be sure, but some of these companies, like Cincinnati Financial Corp, and LKQ Corp are already discussing the competitive threat in the “risk factors” section of their SEC filings.”
We have been talking about the impact of IoT generally, with driverless cars being one example. We are now reaching a tipping point. Sometime in the near future, the technology will be fully matured and the regulatory environment fully adapted to this new paradigm. All sorts of impacts will occur. Insurance coverage will transition from Personal Lines (where people do the driving) to Commercial Lines (where the manufacturer is responsible for the safety and accuracy of the vehicle). While less cars will be in accidents, accidents will still happen. When cars are damaged, the cost will be higher to repair due to the advanced electronics. These cars will probably be connected to the insurer’s claims systems and underwriting models, with the notion of metered insurance a real possibility. People may not even own cars in the future, but simply call the car up on an “Uber-like” service through their smartphone. The car itself may be its own self-contained business, optimizing its availability and the routes it drives based on P&L (the most popular routes) and insurance risk(where the most accidents occur). And what about a driverless ambulance that is auto-dispatched if your fitbit device indicates a health emergency. If the ambulance does not get to the hospital on time, who’s at fault?
As we have said the Internet of Things is actually the Internet of Transformation.
This blog entry has been reprinted with permission.
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