Get ready: autonomous cars will be here sooner than you think - and they will reshape the auto insurance market
This past week, Toyota upped the ante in the race to bring autonomous cars to market - at the Consumer Insurance Blog, we have an update on some of the likely innovations that consumers will see at their auto dealers in the next decade -- along with an infographic from Chubb on consumer readiness for these features.
For agents, these new technologies are more than just consumer conveniences: autonomous cars are an insurance game changer, a "killer app" -- one of those seismic events that will reshape an industry. Earlier this year, Chunka Mui featured an extensive and well-written 7-part series on autonomous cars in Forbes. In Part 6, he deals with the question of whether auto insurers will survive their collision with driverless cars. He notes that some in our $200 billion industry may be asleep at the wheel in thinking that changes will be decades away.Â He offers this cautionary tale:
"For one thing, far-off doomsdays have a way of sneaking up on you. As Paul Carroll and I documented in "Billion-Dollar Lessons," Kodak concluded through very sophisticated market research in the 1980s that it would not be threatened by digital photography for a decade or more. It was right. Unfortunately, it did little to prepare for the inevitable disruptions. When it did attempt to mobilize, the advantages that it once held had little relevance. A succession of CEOs could not stem Kodak's decline into bankruptcy."
In his article, he quotes industry experts as saying that even a 25% adoption rate of crash-avoidance technologies will reduce congestion related accidents, which will in turn trigger material reduction in premiums.
It's important to face the prospect of change with eyes wide open. While Kodak fared poorly due to its failure to anticipate the scope of the changes in camera technologies, competitors adapted and carved niches. Of the dilemma facing insurers, Mui says:
"But driverless technology will take human error out of the equation and make underwriting less important. The basis of competition will shift to other aspects of the business, such as customer relationships, claims processing, expense management and distribution."
Here are links to each of the chapters in Mui's must-read article.
Fasten Your Seatbelts: Google's Driverless Car Is Worth Trillions
The Ripple Effects: As Far As The Eye Can See
Why Change Will Come Sooner Than You Think
How Google Wins
How Automakers Still Win
Will Auto Insurers Survive Their Collision with Driverless Cars?
Driverless Cars Are Just One of Many Looming Disruptions