Google expects driverless cars to be on the road within five years. So far much of the focus has been around privately owned vehicles, but how will the commercial sector respond when technology takes over?
This is not as far away as you might think - NASA and Nissan are already designing autonomous vehicles for the transportation of materials, goods and payloads, and
mining giant Rio Tinto has been using driverless trucks for more than three years.
As is the case in personal lines, the majority of commercial accidents are attributable to human error. Commercial drivers are held to high standards in terms of licensing and driver hours, so how will their roles change? Driving skills might
decrease over time, making it difficult to respond quickly when override is needed.
With the near elimination of human error, claims frequency will tumble, fraud will reduce and ‘crash for cash' will become a thing of the past. The vast amount of
data collected by the car will mean disputes are settled with ease, risk management will be easier and losses fewer - all great news for the fleet industry.
However, there are more variables to consider in the commercial sector -who will be liable when things go wrong - the fleet controller, the manufacturer, or the technology developer? This could be complicated further if different solutions are needed for passenger vehicles, goods vehicles or haulage vehicles.
Unless manufacturers take the lead with factory fitted technology, a secondary market could be created, much like the current telematics market, and technology variables will have to form part of the risk calculation.
Something no one seems to have considered is the possibility that premiums might rise as a result of the impact on the reinsurance market. As large losses reduce, the ability to measure potential and future large losses will improve. Upper limits from the reinsurance market will be calculated scientifically, leading to the term ‘unlimited' being unnecessary. Instead of looking at the highest current loss, compulsory cover may have a defined cap of, say, £100m, and an increase in premium will be required to fund these high limits.
There is much to think about, but what is clear is that the underwriters that stay ahead will be those who are quick to react to this changing landscape and see opportunities rather than threat.
Managing director, Century Underwriting
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