Report: Auto Safety Tech May Prevent Almost All Car Accidents
A new report says the auto insurance industry might lose a lot of revenue because of various auto safety technologies that could virtually eliminate car accidents within the next decade. As Stephanie K. Jones writes in the Insurance Journal article titled, “Future Vision: Will Driving Become Too Safe to Insure?,” the report, released on Tuesday, envisions a possible “massive drop off in auto insurance premium for U.S. property/casualty insurance companies.”
Jones writes that according to the report — “A Scenario: The End of Auto Insurance. What Happens When There Are (Almost) No Accidents,” by Celent, a global consulting and research firm — private passenger and commercial auto premiums comprised 39% of the total for property/casualty insurers in 2011. And in a possible scenario proposed by Celent, the auto insurance portion could drop to 13% in the next decade. “Auto physical damage would drop from 14 percent of total 2012 industry premium to 10 percent by the end of the first five years and then to 3 percent in the second half of the decade,” Jones writes.
Anthony O’Donnell writes for Insurance & Technology:
If a world with almost no auto accidents seems counterintuitive, that’s largely because the technologies driving such a scenario — telematics, collision avoidance, automated traffic law enforcement, and, to a lesser extent robot cars — have tended to be considered separately in the public discussion, according to Donald Light, senior analyst, Celent, the author of the report.
‘If you Google any one of these technologies you’ll get an enormous number of hits but you won’t see the impact on auto insurance,’ Light comments. ‘This report connects the dots.’
The report finds that four technological trends lead the way to a future with far fewer car crashes, including: telematics, collision avoidance, automated traffic law enforcement, and self-driving cars. Except for the robo-cars, these technologies are available now, although, as Jones points out, not widely used.
Jones writes that the report describes telematics as the “creation and use of data regarding driving behavior that is stored in an onboard device and made available to insurance companies and other entities.”
Collision avoidance auto technologies are built into new cars and designed to warn drivers of impending danger on the road, and in some cases take control of a vehicle to avoid an accident.
Automated traffic law enforcement refers to such technologies as red-light cameras and speeding violation cameras that take photos of drivers who are violating traffic laws and send tickets to the vehicles’ owners.
O’Donnell writes that report author Donald Light is not saying exactly what will happen, but is looking out for the auto insurance industry:
Light stresses that the report considers a scenario rather than a prediction, but insists that insurers must begin to seriously consider the possibilities the scenario implies.
‘This is the way things will move,’ he asserts. ‘The question is how far and how fast.’
Image by Celent, used under Fair Use: Reporting.