Insuring Tomorrow: Autonomy in Auto Insurance

The evolution of autonomous vehicles like self-driving cars and e-scooters is set to revolutionise the insurance industry, reducing claims, fraud, and premiums. But they also introduce new opportunities for insurance products. Insurance brokers already offer tailored insurance products designed explicitly for micro-mobility companies. These products include third-party liability coverage, personal accident coverage, and other types of coverage to address the unique risks associated with scooter programs and autonomous vehicles. Still, the subject of liability will only get more complex as automation advances.

The Society of Automotive Engineers has developed a classification system consisting of five levels of autonomy, ranging from Level 0 (no automation) to Level5 (full automation). Insurers can use traditional risk assessment methods for lower levels of autonomy, where human drivers retain control. However, the risks become more compounded as technology moves towards higher levels of autonomy. According to industry experts, fully automated self-driving cars are expected to be available by 2035. At this stage, the risks associated with driving will shift from driver error to technical failure, requiring insurers to reassess their risk models and adopt new approaches. New insurance products for autonomous vehicles may include cyber-attack coverage, software malfunctions, and sensor failures. By 2030, insurance companies will have had to partner with technology companies to provide risk management solutions, such as data monitoring and analysis, to better understand and mitigate risks associated with autonomous vehicles.

Autonomous vehicles are transforming many industries. US futurist Thomas Frey predicts 1 billion unmanned vehicles to be in circulation by 2030 (World of Drones Congress). This doesn’t mean drones will be flying everywhere, but fleets of autonomous vehicles, including autonomous robots, could be operating in every city. Autonomous robots are self-operating systems that perform tasks without human intervention. They make independent decisions and execute actions based on their programming and sensors. They can be used for assembly, inventory management, crop monitoring, patient care, exploration, customer service, security patrols, and transportation services. Autonomous robots make healthcare, business, and travel more efficient.

However, automation always comes with risk. Accidents will inevitably occur due to unforeseen causes and malfunctions. While accidents caused by human negligence and reckless behavior in industries where robots replace humans will likely decrease, new vulnerabilities will arise. For example, the extensive use of sensors and connections in all types of autonomous vehicles raises concerns about their cybersecurity and susceptibility to remote attacks. Also, if a malfunction were to occur, the question of fault (manufacturer vs operator) causes issues for insurers.

The Autonomous Robot Market is projected to achieve a Compound Annual Growth Rate (CAGR) of 19.70% and reach a value of $11,607.13 million by the year 2030 (DataBridge). By 2030, autonomous robots will demonstrate higher levels of intelligence. Their sensing, perception, and decision-making capabilities will all advance, enabling them to perform complex tasks with minimal human intervention. With enhanced AI capabilities such as machine learning and computer vision, these robots will find more applications across various industries, revolutionising manufacturing, healthcare, logistics, and more. Insurers should consider new risk factors associated with autonomous robots, such as potential system failures, cybersecurity vulnerabilities, and liability in case of accidents. The shift towards autonomous technology may also alter the dynamics of insurance coverage, with a potential shift from individual liability to product liability coverage. By the end of the 2020s, transformative insurers should be providing specialised third-party liability products for all types of autonomous vehicles.