By Ian Bowen, sales director, Innovation Group
The machines are coming. From the computers that process our food to the robots that build our technology, automation has infiltrated almost every part of our lives.
So what will a world filled with automated vehicles look like and what kinds of trends can we expect to see developing?
The most obvious trend is in determining the liable party in a driverless car crash.
Presumably a high percentage of accidents will be caused by human error and not machines, perhaps meaning that motor insurance will become profitable.
An interesting side-effect will be accidents happening at lower speeds as the machine is able to brake more quickly than a human.
This will result in less severe injuries, less shunts and less whiplash claims.
This trend already exists to some extent with improved technology in the newest generation of vehicles.
Will we see the emergence of a two-tier policy system, with a basic level to cover the vehicle and a premium to cover humans when they choose to drive?
This would potentially remove the need for annualised premiums and hasten the industry towards a more pay-as-you-go (PAYG) model.
Young drivers currently pay more for insurance than to buy a new vehicle in most cases.
Driverless cars will arguably remove this discrepancy and we may see the cost of cars relative to insurance start to rise again after dipping for the past decade.
Insurers should consider the above trends.
How can these developments be anticipated and applied, no matter how successful driverless technology becomes?
Techniques such as bundling risks, breaking down premiums to associate with different risks, and self-serve, PAYG models are all potential ways for insurers to start diversifying their operations.
What will be key is developing the flexibility and agility to adapt, rather than focusing on a specific future model.