While autonomous vehicles are expected to reduce or possibly even eliminate auto premiums, one industry leader suggests that such an insurance outcome is not necessarily inevitable – or at least not for some time.
“On the commercial vehicle side, there is already a higher duty of care because of the size and differing requirements from a licensing perspective and an oversight perspective by provinces and Transport Canada,” said Angelique Magi, National Vice President of Transportation and Strategic Initiatives, The Guarantee Company of North America.
Magi is a commercial fleet insurance expert who is keeping apprised of the developments taking place in autonomous vehicles and their potential impact to the trucking industry. She foresees that it could take years before the impact to commercial auto insurance premiums for these types of fleets are affected to the levels that many believe is imminent.
Other analysts suggest that the market could, out of an abundance of caution, actually apply a premium to fleet insurance rates for early adopters of the new technology. Magi isn’t prepared to go that far, but suggests the industry will need time to adjust.
“I think the insurance industry by nature is cautious with every new exposure,” she said.
She compares the emerging product to cyber insurance, referencing the length of time it took for underwriters and adjusters to fully understand the exposures involved with emerging technologies and the potential impact.
“When cyber insurance first came out, we didn’t know who would need it or to what extent, and the scope of losses that can happen with hacks and cyber breaches,” Magi said. “But now you’re hearing about cyber attacks more and more, and the need for that particularly product to the consumer is very clear. The ability to price the premiums by the type of commercial consumer is more transparent because the exposure has been identified in real terms based on historical events.”
Driverless cars will experience a similar process of analysis and scrutiny.
“The same thing will take place with other emerging products, whether that’s in relation to the shared economy or autonomous vehicles,” she said. “The insurance industry has decades of statistical information as it relates to auto losses and profitability models, understanding the true liability exposures for this emerging technology and gaining a comfort in how to price the exposure from a commercial perspective will take the industry some time.”
