Arity Says Insurers Not Considering AV Risk

Arity Says Insurers Not Considering AV Risk

Insurers are not considering whether self-driving technology or human occupants are to blame if an autonomous vehicle crashes.

That’s the view of Grady Irey, senior vice-president of data and analytics at Arity, a maker of software for automotive insurers. In an exclusive interview with TU-Automotive that covered the implications of the growth of telematics technology and connected and autonomous vehicles for the insurance industry, Irey said he thinks insurers are not thinking enough about whether the risk of an AV should be apportioned to its self-driving tech or the human back-up driver, particularly in the case of Level 3 AVs.

“For all the right reasons, insurance is regulated. We need to move the structure of these products, these risk transfer agreements, with the regulators to be able to accommodate these new models. Let me be specific: if vehicles are partly self-driving or completely self-driving, the question of who bears the risk is a relevant question. Especially in a world where it’s part-time self-driving and part-time driver-controlled.”

“Then there’s probably, or at least possibly, a mixture of who bears the risk. I think that structure isn’t necessarily contemplated in today’s insurance world. I think the difficulty is in adapting to it. It’s not really any significant change in difficulty in being able to price it accurately. You just need the data that represents the predictor variables and you need the outcome data. In all these cases, we can have all of that, you just need to do the modeling so the process is still the same. It’s the structure around it that needs to adapt.”

Collaboration needed

Irey also said he thinks current telematics tech is “esoteric” and insurers and regulators will have to collaborate more closely to ensure it is used responsibly in the insurance process.

“In an industry that’s as regulated as the insurance industry, we have a burden that I don’t know that we’ve yet done well enough to carry. That is: to make sure that we look at the regulators as partners. We have to learn and share what we learn with them, because they essentially have the same ends and goals in mind that we do: safer transportation for everyone.”

“So if we’re learning, we’ve got all this investment in telematics which at this point is a pretty esoteric science. We have a responsibility to make sure that the rest of the insurance industry and the regulators are learning as we learn so we can all pursue the same goal of safer transportation.” However, Irey added that overall, he thinks telematics offers insurers the “gigantic advantage” of “learning about their customers every day”.

Smartphone challenges

He then claimed “the most ubiquitous” technological challenge to the automotive insurance industry is the smartphone.

“It’s not just within telematics and it’s not just within the insurance industry but mobile phones have changed everything about providing the right sort of services and the right sort of value to customers. I think insurance companies are just now starting to realize what they need to do to invest in a better understanding of and usage of this consistent durable connection with customers in order to follow them where they want to go. That level of technology focus and investment is very, very different from where the insurance industry has been in the past.”

“You hear from the industry all the time ‘we’re moving from an old technology platform to a new technology platform’. A lot of them are using some of these vendor platforms because they feel like ‘even if we switch over, we’re only going to have to switch over again very soon and it might be helpful to work with a partner that’s doing that for us’. I think that is representative of the fact that the industry is now recognizing that keeping up with the customer is the key to business success.”

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