Jump to content
House Price Crash Forum
R K

The End Of The Road For Retail Motor Insurers?

Recommended Posts

http://bankunderground.co.uk/2015/06/19/driverless-cars-insurers-cannot-be-asleep-at-the-wheel/

So, it's another google/driverless cars article but this time looking at retail motor insurance provision. Rather than it get lost in the main OT thread perhaps worth it's own thread since motor insurance is such a large industry in UK and affects most drivers

In 2020 Google plans to launch a self-driving car which has already driven nearly one million miles without causing an accident; it doesn’t get tired and irritable, swerve into lamp posts or require a driving test. The in-built chauffeur comes in the form of a rotating LIDAR laser taking 1.3 million recordings per second, and it’s a better driver than you. By eliminating the element of human blunders, driverless cars are forecast to reduce motor accidents by up to 90% in the US according to McKinsey. That might imply a substantial impact on the insurance industry, with liability potentially shifting to car manufacturers. Such developments would pose challenging questions for the PRA in regulating UK insurance firms.

In the UK 23% of all car insurance claims result from parking incidents of which 71% occur during reversing. A switch to driverless cars could largely eliminate these costs. This is a double edged sword for UK insurers who underwrote around £8bn in private motor insurance premiums last year. What they could save in falling claims costs and frequency, they stand to lose in shrinking premiums – one estimate being as much as 50% by 2025 and 80% by 2040 according to Thatcham Research.

The entire basis of motor insurance, which mainly exists because people crash, could also be upended. Harvesting data on individual drivers is key for insurers to predict the riskiness of people – more information means smarter pricing. But self-driving cars take the driver out of the equation – a 17 year old male and 35 year old female could now receive the same car insurance quote – with the vehicle as the key determinant of risk.

But the reality is that vehicle technology is already assisting human judgement; parking sensors, automatic braking and cruise control make it 25-45% less likely that an accident will occur, granting drivers up to a 20% reduction in car insurance. As human drivers become replaced by lasers and sensors, the placement of liability may start to shift towards manufacturers.

A case in point: Volvo has aspirationally declared that by 2020 no-one will die in one of its cars – a claim which will hinge on the robustness of Volvo’s technology. This could make them liable in the event of a car collision caused by faulty sensors if Volvo guarantees to cover the costs of accidents to lure customers. Volvo could become the de facto insurer of its own product.

Excellent news for drivers, young drivers in particular, but less good if you work for a motor insurer or own their shares (Hello Warren Buffet)

Edited by R K

Share this post


Link to post
Share on other sites

If someone trusts a computer to control a car, or a fairground ride at Alton Towers for that matter, then that person is an idiot.

Share this post


Link to post
Share on other sites

i cant wait till i go racing around in my sweet little sports car and all those jags and volvos with the auto brakes come to a sudden stop to avoid me, its gona be great! nice and safe, thx guys

Share this post


Link to post
Share on other sites

If someone trusts a computer to control a car, or a fairground ride at Alton Towers for that matter, then that person is an idiot.

Well that's not really the question though - the question is what is the impact on the massive retail motor insurance industry as the liability shifts from the chimp behind the wheel to the technology provider.

Share this post


Link to post
Share on other sites
Guest eight

Well that's not really the question though - the question is what is the impact on the massive retail motor insurance industry as the liability shifts from the chimp behind the wheel to the technology provider.

I sense that the insurance industry is struggling anyway, when the only way they have to differentiate their products is who gives away the best toy.

I have to laugh at Direct Line's "we're cheaper than comparison sites". Well why not list on comparison sites too then, and hoover up ALL the business?

Share this post


Link to post
Share on other sites

I hate driving so I am looking forward to not having to do it :P.

Me too. I think its great. Last time I drove the fours or so down the M1, I thought why can't a computer do this?

Also Google cars, will make it a lot safer for low powered transport users such as cyclists.

Edited by RentierParadisio

Share this post


Link to post
Share on other sites

I sense that the insurance industry is struggling anyway, when the only way they have to differentiate their products is who gives away the best toy.

I have to laugh at Direct Line's "we're cheaper than comparison sites". Well why not list on comparison sites too then, and hoover up ALL the business?

Good point.

Plus, legislation tends to lag tech developments. So one could imagine tory party being lobbied by their friends in the City/Insurance industry to attempt to delay the death of the retail motor industry, but it looks inevitable eventually.

If a driverless car is safe enough to be let out on the street then it's safe enough not to require the passenger/owner to need to insure it, except perhaps against 3rd party loss/theft but that ought to be optional.

Share this post


Link to post
Share on other sites

I don't think they will sell many, even if they do launch. Aren't we a bit too resistant to change?

Their test car may of driven nearly a million miles, but it's not a production version. It would have to be proven in reality before they reduced premiums.

Share this post


Link to post
Share on other sites

If someone trusts a computer to control a car, or a fairground ride at Alton Towers for that matter, then that person is an idiot.

Well, if you get on a plane (pilots are mainly doing procedural stuff/passenger reassurance these days/pushing up flighing hours for rookie 1st officers). I would imagine that the relatives of those lost on the Germanwings flight would disagree with you. Also, I think that the Alton Towers ride was perfectly safe while the computer was managing the ride. It locked the trains when a fault condition was detected. The accident happened when someone overrode the computer lockout.

I don't think they will sell many, even if they do launch. Aren't we a bit too resistant to change?

Change like mobiles, internet banking, social media, streaming music videos, etc - or maybe you are an old person? Youngsters will be making hundreds of millions of ad hoc journeys in them in five to seven years - trust me.

Share this post


Link to post
Share on other sites

It should be a great boon for the pub trade. We can all get legless down the pub after work like the gold old days :)

+1 Just as well since many people no longer have a 'local'.

Share this post


Link to post
Share on other sites

Well, if you get on a plane (pilots are mainly doing procedural stuff/passenger reassurance these days/pushing up flighing hours for rookie 1st officers). I would imagine that the relatives of those lost on the Germanwings flight would disagree with you. Also, I think that the Alton Towers ride was perfectly safe while the computer was managing the ride. It locked the trains when a fault condition was detected. The accident happened when someone overrode the computer lockout.

Change like mobiles, internet banking, social media, streaming music videos, etc - or maybe you are an old person? Youngsters will be making hundreds of millions of ad hoc journeys in them in five to seven years - trust me.

That timescale feels about right doesn't it. Perhaps a little longer.

So insurance cos may be able to survive perhaps into the next decade then a rapid drop off & death.

Imagine young people not having to hand £thousands a year over to insurers just to drive 10 year old fiestas/corsas to enable them to get to work. It will be transformative on many levels especially, as you say, for youngsters. They are going to see a turnaround in their fortunes/opportunities.

Share this post


Link to post
Share on other sites

Change like mobiles, internet banking, social media, streaming music videos, etc - or maybe you are an old person? Youngsters will be making hundreds of millions of ad hoc journeys in them in five to seven years - trust me.

not old and do all of the above, but they are all 'safe' armchair activities which you are in control of - being hurled along at up to 70mph on UK roads in a pod controlled by a computer is a bigger step. A lot of people like/enjoy driving (don't want or need additional time to work or use internet), and like being in control, this is why I don't think it will do that well. I can sort of see it being good as a short journey taxi service in city centres - swipe your card, get in, tell it where you want to go... but I wouldn't want to own one.

Share this post


Link to post
Share on other sites

being hurled along at up to 70mph on UK roads in a pod controlled by a computer is a bigger step.

I would rather that than be amongst the '70mph hurlers' who are; on the phone, checking texts, smacking the kids or grooving along to a rave tune!

These things will be so over-engineered that for, users and pedestrians alike, you will be safer with them than in your own bed asleep.

Edited by Bill D'arblay

Share this post


Link to post
Share on other sites

I would rather that than be amongst the '70mph hurlers' who are; on the phone, checking texts, smacking the kids or grooving along to a rave tune!

These things will be so over-engineered that for, users and pedestrians alike, you will be safer with them than in your own bed asleep.

Yes, but that doesn't mean that lots of people will want to use or own one.

Plenty of people like driving 'proper' cars. There is a huge car modification/upgrade industry etc. I don't think automated vehicles will catch on massively - or at least, not as a replacement for 'proper' cars.

Perhaps people will use them as a form of public transport, but for times when they want to drive they will still have the Ferrari or Golf R ready to go!

Share this post


Link to post
Share on other sites

not old and do all of the above, but they are all 'safe' armchair activities which you are in control of - being hurled along at up to 70mph on UK roads in a pod controlled by a computer is a bigger step. A lot of people like/enjoy driving (don't want or need additional time to work or use internet), and like being in control, this is why I don't think it will do that well. I can sort of see it being good as a short journey taxi service in city centres - swipe your card, get in, tell it where you want to go... but I wouldn't want to own one.

On a B-road, perhaps. On a motorway, i'd rather set the cruise to 90, sit back and procrastinate on HPC.

Share this post


Link to post
Share on other sites

I sense that the insurance industry is struggling anyway, when the only way they have to differentiate their products is who gives away the best toy.

I have to laugh at Direct Line's "we're cheaper than comparison sites". Well why not list on comparison sites too then, and hoover up ALL the business?

Direct Line is the Polaroid of the insurance industry. Complete failure to adapt. They had 3m policy holders in their heyday, I wonder how many they have now.

Share this post


Link to post
Share on other sites

A taxi where the opinionated driver doesn't try to make conversation? Great!

Much as a lot of people enjoy driving, I don't think that counts for a lot of journeys e.g. commuting or going to the supermarket. I suspect with an increased proportion of driverless cars using the road the severity of a lot of accidents will decrease as there will be less multiple pile-ups occurring, and those computer controlled ones can react to bad human drivers better.

This will definitely help cyclists, and I look forward to being able to use my motorbike around more predictable driving.

Share this post


Link to post
Share on other sites

Plenty of people like driving 'proper' cars. There is a huge car modification/upgrade industry etc. I don't think automated vehicles will catch on massively - or at least, not as a replacement for 'proper' cars.

The initial early adopter 'bling bling' phase will be extremely short lived. Internet coms are waiting to quickly pile in with disrupting business models which will make owning your own car much, much more expensive and inconvienient. So much so that even leasing (other than b2b or short holiday hires) will die a death. When the overwhelming economic and convenience argument has won out the next phase will kick in.

Very quickly (<5 years after release) the vast majority of journeys will be made in these vehicles. Those who cling to their cars, either as a hobby, nostalgia or just plain preference, will find that life will be made more and more difficult for them. The giant corps will lobby the government for retrictions on manual cars for 'Elf and Safety' and even on grounds of 'preventing terrorism'. Employers will refuse to accept your 'excuse' if you are late in a manual car - some may insist that you ditch it 'for insurance and compliance' purposes.

Enjoy your car/bike while you can - within ten years you will not have the privilege except on a race track.

Share this post


Link to post
Share on other sites

It will be transformative on many levels especially, as you say, for youngsters. They are going to see a turnaround in their fortunes/opportunities.

The main beneficiaries will be land lords who can soak up all that extra disposable income in rent, oh the wonders of a rentier economy.

Share this post


Link to post
Share on other sites

If someone trusts a computer to control a car, or a fairground ride at Alton Towers for that matter, then that person is an idiot.

I think you would already be hard pushed to find a modern car that does not rely on a computer, and even if you can you will be on a road populated by cars relying on their computers not to crash into you.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • Next General Election   90 members have voted

    1. 1. When do you predict the next general election will be held?


      • 2019
      • 2020
      • 2021
      • 2022

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.