Towards a safer, driverless future

Swiss Re teams up with HERE to map the insurance implications of connected cars and automated cars.

New technologies such as car connectivity and Automated Driver Assistance Systems (ADAS) are disrupting the motoring world, making driving much safer and opening new opportunities for re/insurers.

According to a new study, a collaboration between maps giant HERE and Swiss Re, sophisticated ADAS features could cut motor accident frequency by more than 3.5% by 2020, helping reduce the yearly 1.2 million fatal road traffic accidents worldwide.

Fewer accidents will likely lead to lower expected losses for insurers, which in turn should bring down overall 3rd party motor liability premiums. As sensors and car computing become more complex and replace an increasing number of the driving decisions, part of the liability will shift from the driver to the product manufacturer. However, other motor risks, such as damage from hail or losses from theft, will remain.

The research also found that car connectivity opens huge opportunities in the area of Usage-Based Insurance (UBI). Products based on how often, where and how people drive not only enable insurers to foster better driving behaviours -leading to lower risks- but also offer new solutions for increased flexibility. For instance, in future, users will be able pay for car insurance cover for as little as an hour's driving, and rates will adjust from one drive to the next.

Jayne Plunkett, who heads up the Casualty Reinsurance Underwriting Division at Swiss Re, highlighted: "New technologies are helping us better understand and manage risks. Vehicles outfitted with sensors and control modules that enable vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) communications offer drivers re-routing suggestions to avoid road hazards and call for assistance in the event of an accident. Soon, cars will have precise-enough awareness of where they are in relation to other vehicles and potential hazards to take preemptive action to avoid accidents, helping us make the world's roads safer and increase resilience".