QIS: New Autonomous Truck Technology Could Transform Insurance Industry
May 1, 2017
The introduction of truly driverless long haul freight vehicles has the potential to create a once-in-a-century economic impact—and a new role for insurers.
(Pleasanton, CA) May 1, 2017—In February, Embark, a startup based in San Mateo, CA, announced a self-driving technology that would allow trucks to run on highways with no human input. Unlike technology concepts recently announced by other manufacturers, Embark’s goal is not simply to assist drivers, but to enable completely unmanned trucks to travel on highways from entrance to exit, while continuing to rely on humans for city driving.1
“This is truly a game-changer,” said Michael Macauley, CEO of Quadrant Information Services, a leading supplier of pricing analytics services to property and casualty insurance carriers. “It very sensibly splits the activity of truck driving into two parts—maneuvering a load around city streets, and long haul driving on the freeway. City driving is complex and unpredictable, so Embark isn’t trying to automate that. However, the vast bulk of the time a big truck is in use is on the freeway. There, full automation can safely be used—with a staggering boost to productivity.”
In fact, global consulting firm McKinsey and Co. estimates that the economic impact from advances in autonomous vehicles could reach as much as $1.9 trillion annually by 2025.2 A significant contributor to this earnings boost would be the change—not just in manpower requirements, but in the overall logistics equation—that truly driverless long haul technology would bring to the trucking industry, which, at 64% of the value of total freight shipped, continues to dominate the nation’s freight transportation system.3
At the moment, trucks are designed to carry around 12 hours’ worth of fuel; more would be unnecessary weight, because truck drivers refuel when they stop to rest for the night. But a self-driving truck could carry all the fuel it needed to get from its starting point to the final destination, driving continuously until it arrives. This would mean that trucks would be on the road non-stop, making the rigs themselves more profitable. It would also mean faster delivery times, as loads wouldn’t be stationary once they departed.4
One potentially effective way to deploy totally autonomous trucks, Macauley noted, is through platooning, which comprises a number of automated trucks, one following the other and mutually communicating. With the following trucks able to brake immediately with zero reaction time, platooning can improve traffic safety. It’s also a cost-saver, as running the trucks close together at a constant speed reduces fuel consumption and CO2 emissions.5
To encourage the development of autonomous trucking technology and platooning, the adjoining states of Michigan, Ohio and Pennsylvania announced the formation of the Smart Belt Coalition early this year. This research and development coalition is made up of the departments of transportation in the three states, the University of Michigan, Ohio State University, and Carnegie Mellon University, as well as the Ohio Turnpike and Infrastructure Commission, the Pennsylvania Turnpike Commission, and Ohio’s Transportation Research Center.6
As to the potential effects of fully autonomous trucking technology on jobs, Macauley points out that there is currently a severe shortage of truck drivers in the United States.7 “The industry that’s really going to be impacted,” he said, “is insurance. Remember, the development of these fully autonomous trucks isn’t happening in a vacuum. There’s also tremendous interest in self-driving cars and buses, and maybe even passenger-carrying drone aircraft.” He continued to explain that it is unknown what the ownership patterns for these technologies will be, because the numbers are not clear. Given the complexity of the technological and liability issues involved, it’s entirely possible that it will be owned by manufacturers and leased on a long-term basis to transportation companies. That means that P&C insurance carriers and agencies will transition from selling to consumers to selling to makers of autonomous vehicles. To navigate that change successfully, insurers will need to know as much as possible, as rapidly as possible, about what’s happening to their markets. And providing that information—as well as keeping it current—is and will continue to be a big part of the mission at Quadrant Information Services.
About Quadrant Information Services:
Quadrant Information Services, headquartered in Pleasanton, CA, provides pricing analytics solutions for property and casualty insurance companies. Quadrant gives actuary, product development, pricing, sales and marketing personnel at its client companies—which include all the major insurance carriers in the United States—the data they need to make accurate, data-driven decisions. An industry innovator since its founding in 1991, Quadrant has provided the P&C insurance field with a long series of technological advances, including InsureWatch, the industry’s first cloud-based pricing tool, which allows the user to produce unlimited combinations of reports with the click of a mouse. For more information, and to learn why Quadrant is for insurance companies that are tired of losing the right customers and winning the wrong ones, please visit www.quadinfo.com.
Clevenger, Seth, “Embark Enters Race to Develop Autonomous Trucks,” Transport Topics, February 24, 2017.
van Rossum, Jan-Emile, “3 things every entrepreneur should know about autonomous vehicles,” Washington Business Journal, April 14, 2017. entrepreneur-should-know-about.html
“Growth in the Nation’s Freight Shipments,” U.S. Bureau of Transportation, 2002.
Golson, Jordan, “This startup sees the highways filled with self-driving big rigs,” The Verge, February 24, 2017. truck-tractor-trailer
“What is Truck Platooning?”, Creating Next-Generation Mobility, European Truck Platooning, 2016.
Elfin, David, “States Partner for Testing, Research of Autonomous Platooning Vehicles,” Transport Topics, February 6, 2017.
Robinson, Adam, “The Current State of the Driver Shortage,” Cerasis, May 3, 2016.
Karla Jo Helms