Study assesses risk in a changing insurance market for driverless vehicles

MCLEAN, VA (May 9, 2017) – In October 2015, tax giant KPMG published a report projecting a 60% reduction in the $135 billion auto insurance market by 2040 owing to the advent of driverless cars and the ensuing risk landscape. Despite projections, insurers will likely play a key role in the adoption of driverless cars. The extent of driverless accidents presents risk management challenges to both the automotive and insurance industries.  Future motor policies may require non-traditional risk management, underwriting and actuarial approaches to account for driverless capabilities and shifting liabilities.

Driverless cars fall outside conventional insurance risk management practices because, among other reasons, there is so little in the way of historical data. In the study “Risk Assessment of Semi-Autonomous Vehicles Using Driver Behaviour Risk Analysis: A Paradigm Shift in Motor Insurance,” author Cian Ryan proposes how risks might be governed and policies constructed using the enormous reams of data that driverless vehicles will supply the automotive insurance market.  Ryan is a researcher at the University of Limerick and a contributing partner to the Vision Inspired Driver Assistance Systems (VI-DAS) initiative, a grant-funded project under the European Union’s Horizon 2020 Research and Innovation Programme.

Ryan examines the “likely risk trajectories across six levels of vehicle automation” by examining automated driving anomalies, from swerving and braking to system disengagements. Due to the complexity of autonomous systems, safety-critical risks will likely materialize in the actuation process (i.e. steering, braking, and acceleration). Thus, any anomalous driving may be symptomatic of hardware or software faults, for example. His paper proposes a model that takes advantage of the enormous data sets that will be generated covering hundreds of millions of driverless vehicle miles.  As insurance risks shift from individual owners to original equipment manufacturers and their suppliers, as well as software engineering firms, Ryan offers a model that can address the “potentially large loss exposures for these industries”

Manufacturers, software companies, insurers, law firms, and governmental agencies have a clear stake in what is likely to be a sea of change in risk policy across private and public sectors. 

Cian Ryan will be formally presenting this paper at the June 19-21 conference of the Society for Risk Analysis in Lisbon, Portugal, at the Calouste Gulbenkian Foundation.  If you wish to speak directly with Mr. Ryan about his forthcoming paper, please feel free to contact me directly. If you anticipate attending the conference so you can meet Mr. Ryan, please let me know so I may arrange a press pass for you. 

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The nonprofit Society for Risk Analysis (SRA) is an interdisciplinary, scholarly, international society that provides an open forum for all who are interested in risk analysis, a critical function in complex modern societies. Risk analysis includes risk assessment, risk characterization, risk communication, risk management, and risk policy affecting individuals, public- and private-sector organizations, and societies at a local, regional, national, or global level. To learn more, visit www.sra.org.

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