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Challenge to Insurers: The Age of the Driverless Car

Quadrant Quick Take: To properly cover these vehicles—and the people inside them—the insurance industry needs powerful new big-data tools. And it needs them quickly.

Two years ago, the U.S. secretary of transportation predicted that within a decade, self-driving cars would be common not only in the United States but all over the world. One year ago, Ford announced plans to roll out a line of “fully autonomous”—i.e., able to get from Point A to Point B without a human being in control—cars by 2021. BMW, Google, Audi, Tesla, and a number of other manufacturers have similar projects in the works.

Here’s another prediction for you: in the driverless future, it will be much more difficult and complicated for carriers and agents to write auto insurance. Why? Because this technology is going to turn the industry upside down.

Right now, your auto insurance rates are based on what you know about the driver, the geographical area, and the car. If one of your current customers has a Ford (or a whatever) that’s passed inspection in your state, you know a lot about that car. With driverless vehicles, it’s a different story. Dozens of companies are all pursuing unique (and patentable) solutions to problems that until recently didn’t exist.

Which means that insurance rates for these vehicles will be based on information about a new class of computerized technologies and how they interact with each other, with weather, with traffic, and with human beings. The information will all be available; places like Germany and California will set the disclosure standards, and everybody else will fall into line. But there’s going to be a lot of it; this is exponentially more complex than the math that goes into traditional auto insurance rate-setting. Insurance carriers and agents will need robust cloud-based computing and powerful data analytics to assess the risks and properly insure a driverless future.

It’s essential they do that, because with people putting themselves into the hands of technology they don’t control, on the road, the importance of making sure that those people are properly insured is exponentially high—as will be the demand for that insurance. In this emerging world of new and very complex risk factors, big data tools, such as those under development at Quadrant, will be crucial to the ability of agencies to find the right plans for their customers.

At Quadrant Information Services, our business is helping p&c insurers become better competitors in a competitive world. Check out what we have to offer—it may surprise you!

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