Car insurance (2/2): Data ownership and cyber security

The new technologies will first appear in luxury cars. However, mainstream manufacturers are also working hard. How will the change affect insurers? We began examining this topic in the previous article.

General Motors was already testing its autonomous cars in August 2016 and wants to offer fully autonomous vehicles in large numbers by 2021.

Toyota has set up a new research institute to advance the concept of a self-driving car. In 2020 it should assist drivers (though not directly replace them).

That said, it is expected that the first policies aimed at autonomous vehicle insurance will be crafted around 2019.

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Cyber security: a new opportunity?

US government security agencies (including the FBI) made it clear in 2016 that driverless vehicles are at risk of unauthorised remote access. This means driver data and vehicle functionality may be under threat, according to an article at strategy-business.com.

For insurers, the winners will be those who move early in response to the drop in revenues from traditional car premiums and identify new opportunities (such as coverage of cyber security in cars), where risk is not yet well understood and where new forms of insurance will be in demand.

Cyber risk is a real concern for autonomous vehicles. In 2015, Chrysler recalled 1.4 million vehicles as there was a flaw in their software that could have made it possible to access the vehicles remotely. Tesla was also forced to update its software.

The greatest risk for insurers is the possible loss of control over their data. And it is data that enables them to price risk appropriately.

Such data as statistics on speed, distance between vehicles or brake pressure and driver distractions will be available to the manufacturer, who will thus ultimately be in a better position to evaluate and price risks.

-jk-

Article source Strategy+Business - a U.S. management magazine
Read more articles from Strategy+Business

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