It was in the news recently that “driver-less cars are filling the streets of San Francisco soon.” This article analyzes the implication of self-driving cars on the insurance policy administration and its impact on the PAS system.
As this tendency takes traction, the insurance industry has to deal with a rising argument over liability allocation—whether it rests on the manufacturer or the vehicle owner. While current insurance requirements in the United States require the gathering of driver information and motor vehicle reports along the advancement of telematics technology makes the collecting of driving behavior data. The paradigm shift poses a challenge to the policy administration framework in the United States. The absence of a traditional driver prompts the delineation of responsibility to the “car system” or manufacturer. However, in cases where human intervention is viable but remains unexercised, the question of accountability extends to the passenger or occupant.
Hypothetically, If the manufacturer assumes responsibility, it raises the question of whether product liability coverage is enough and can be effectively integrated into auto insurance. This potential shift could have implications for the policy administration systems. While the exact depth of data to be collected is unknown, preliminary considerations include:
1. A liability coverage designed expressly for self-driving cars that holds manufacturers fully responsible for manufacturing or system design flaws that result in liability claims.
2. The owner is responsible for vehicle comprehensive and collision coverage, which is supplemented by limited liability coverage only if not covered by the manufacturer’s liability policy.
3. Until self-driving car insurance becomes more stable, other vehicle owners may want uninsured or underinsured motorist coverage to protect themselves against liability issues.
These changes will unavoidably be felt in the development of policy administration systems that follow the introduction of self-driving car. In anticipation of these changes, an intersection of legislation and changing insurance products is on the horizon. The readiness of the information technology sector to adjust key systems and analyze data from autonomous vehicles is critical.
Envisaging the prospective shifts:
1. Mandating analytics derived from self-driving car data.
2. Analyzing parameters such as manufacturer, self-driving system, driving history, location, and weather conditions.
3. Shifting focus from the “driver” to the autonomous driving “system” as the new determiner.
4. Assessing loss ratios and history based on the specific “system” as a determinant for premiums.
5. Linking liability for accidents due to manufacturing defects to corresponding policies and subsequent recovery processes.
6. Constraining owner liability to instances not attributable to manufacturing defects.
Premium determination are likely to be significantly altered. As historical data on accidents and claims for fully autonomous vehicles becomes more thorough, other rating elements, including as the manufacturer, system capabilities, human intervention capacity, and technical integration, will rise to prominence. This shift has the ability to reshape policy administration functions such as:
a) The data collection technique for policy issuance.
b) Underwriting criteria.
b) Rating criterion.
d) Modifications to business rules
e) Enabling ongoing data monitoring and analysis from sensors to generate insightful underwriting perspectives.
The implications of these upcoming changes on processes and policy administration systems must be thoroughly researched with anticipation.