Featured Product
This Week in Quality Digest Live
Innovation Features
Tamela Serensits
Establish a profitable quality program in 2021
Andrew Peterson
Small manufacturers want robots with more human-like dexterity and self-control
Ryan E. Day
Can lean manufacturing ease the U.S. housing crisis?
Quality Digest
This year, more companies will make the cyber-leap as an online marketing strategy
Knowledge at Wharton
Research shows creativity happens through collaboration, but remote workers find it hard to feel connected

More Features

Innovation News
Interfacial launches highly filled, proprietary polymer masterbatches
‘Completely new diagnostic platform’ could prove to be a valuable clinical tool for detecting exposure to multiple viruses
Precitech ships Nanoform X diamond turning lathe to Keene State College
Galileo’s Telescope describes how to measure success at the top of the organization, translate down to every level of supervision
Realistic variations in glossiness could aid fine art reproduction and the design of prosthetics
NSF-funded project is developing a model to help manufacturers pivot and produce personal protective equipment
Despite being far from campus because of the pandemic, some students are engineering a creative way to stay connected
What continual improvement, change, and innovation are, and how they apply to performance improvement

More News

Frost and Sullivan

Innovation

Who Pays Insurance for Autonomous Vehicles?

Premiums likely to shift from drivers to OEMs

Published: Wednesday, October 28, 2015 - 13:53

(Frost & Sullivan: London) -- The current system of calculating motor insurance premiums places importance on driver-related factors such as age, gender, and driving record. However, the introduction of autonomous vehicles will turn the spotlight on vehicle-related parameters. As the vehicle insurance business goes through this transformation, the future holds vast potential for novel risk evaluation models.

New analysis from Frost & Sullivan, “Impact of Automated Vehicles on Motor Insurance Market,” finds that vehicle insurers will move away from the driver-centric strategy to follow one or a combination of three models as automated vehicles become common:
• Product-centric evaluation
• Brand-centric evaluation
• System-centric evaluation

(For complimentary access to more information on this research, click here.)

“Along with higher product liability, the responsibility of insuring the vehicle will shift from vehicle owners to manufacturers,” says Frost & Sullivan automotive and transportation senior research analyst Kamalesh Mohanarangam. “Further, all excesses currently covered by the insured will be shared among several stakeholders, such as road operators and local transport authorities.”

Because the risk of accidents will fall drastically with the advent of autonomous vehicles, the insurance premium to cover that risk also will drop significantly. Nevertheless, original equipment manufacturers (OEMs) and suppliers will increase insurance spend to cover their share of product liability risk, thereby offsetting the shrinkage in consumer-driven insurance revenues.

With OEMs and tier 1 suppliers looking to ensure foolproof product safety, methods to assess risk and certify the product will assume greater importance. The traditional method of underwriting using historic data will take a back seat, creating an opportunity for a new breed of underwriters capable of evaluating driving algorithms and assigning a relevant risk priority number.

“Moreover, insurers will develop new products for risks arising out of innovations,” notes Mohanarangam. “For instance, with the digitalization of automobiles, insurers will provide ‘cyber cover’ for protection against cyber-attacks and hacks.”

In the wake of plummeting premiums, motor insurance will become part of other insurance policies and value-added packages as stakeholders look to new avenues of profit generation in a changing environment.

“Impact of Automated Vehicles on Motor Insurance Market” (MA70-18) is a Strategic Insight that is part of the Automotive and Transportation Growth Partnership Service program. This research analyzes and forecasts the risks and opportunities for the motor insurance industry due to the advent of autonomous vehicles. The study provides a strategic overview of the motor insurance industry and OEM involvement in this space. It also highlights the challenges that participants must overcome, concluding with expectations on the future of the industry.

Discuss

About The Author

Frost and Sullivan’s picture

Frost and Sullivan

Frost & Sullivan, the Growth Partnership Co., enables clients to accelerate growth and achieve best in class positions in growth, innovation, and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 35 offices on six continents.