QIS Quick Take: self-piloting boats and ships are coming soon—and insurers need to be on board.
Only yesterday, the idea of self-driving cars and trucks was something out of a science fiction story. And then boom, it happened: Business Insider estimates that there will be ten million autonomous cars on the road by 2020, and the property and casualty insurance industry is busily calculating risks and liabilities for them. And now, before we’ve even had a chance to catch our breath, here comes a new class of robotic vehicles to demand our attention: autonomous boats.
Although it will probably have some military applications, the biggest customer for this technology will be the international shipping industry. 90% of all world trade is transported by ship. Crew costs account for anywhere from 35% to 50% of the total cost of operating a container shipping vessel, which makes unmanned drone ships—should they become feasible—a major money-saver for the industry.
Getting there will require several technologies that don’t exist yet, including relatively high-speed, dependable data transfer anywhere on the open seas. Early entrants in the field, however, including Rolls Royce—which has been working on drone cargo ships since 2013—believe that all the pieces will come together to make it possible. Rolls estimates that eliminating the infrastructure needed to support an on-board human crew could result in a 12% to 15% savings in fuel costs, on top of the labor savings.
So the potential financial benefits of autonomous boating and shipping are enormous, as are the projected benefits in terms of increased safety and reliability. Right now, however, we can’t really quantify those benefits, nor can we size—even approximately—the risks involved. As the drone shipping industry develops, insurers will need to stay abreast of events so as to properly protect their customers. At QIS, we’ll be gathering and passing along to our clients information that will help them stay competitive in this rapidly changing world.
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