HIGH GEAR: The road ahead for self-driving cars

With cars becoming smarter and more sophisticated, the day isn’t far when fully autonomous and connected cars will rule the roads. What does this mean for insurance?

Self-driving and connected cars will become a regular feature on our roads by 2030. They’re well on their way - already partially automated and getting increasingly sophisticated by the year. Self-driving cars hold implications not just for road safety but also for motor insurance. Christoph Lauterwasser, the head of Allianz’s accident research unit - Allianz Center for Technology (AZT) - on how self-driving and connected cars will change the insurance landscape...

Christoph Lauterwasser, the head of Allianz Center for Technology, works on crash research

Human error is responsible for 90 percent of road accidents. Do you think automated driving can reduce collisions?
Christoph Lauterwasser: Yes. The more automated a car, the smarter it becomes because it has sensors that are always on, even when the car is operated by the driver. Such cars can bring down the number of accidents. Technological progress will indeed make our roads a lot safer in the future. We can expect serial production of fully autonomous cars by 2030. But even before that, we should see a decline in road accidents and deaths because many new cars will be equipped with advanced driver assistance systems. From 2020 onwards, highly automated functions will be integrated step by step.

Will a potential reduction in accidents mean fewer motor insurance claims for Allianz and lower premiums for drivers?
Christoph Lauterwasser: We do expect the number of accidents and insurance claims to go down significantly, but only in the very long term. At the moment, we don’t see a decrease in claims. What we actually see today is a rise in average claim amounts because cars are increasingly equipped with sensors, cameras and other expensive technology that raise repair costs after an accident. Also, please don’t forget that drivers don’t exchange their cars for a new model every other year, like they do their mobiles. Many older cars with less sophisticated assistance systems and little automation are likely to remain on the roads for some time to come. Then, there will always be claims such as glass breakage, hail damage or theft, regardless of the level of automation.

What kind of automation do we see now? And what’s coming up next?
Christoph Lauterwasser: The parking of cars is already fully automated for some high-end models. Especially exciting is automakers testing autonomous driving on our highways. Drawing from my personal experience, I think it’s working fine, also in heavy traffic. Within two-three years, we might see the first commercial cars driving automatically on highways. But autonomous driving in cities is a totally different story due to the complexity of urban traffic. That could become a reality by 2025.

What’s the downside of highly connected cars?
Christoph Lauterwasser: It’s not really a downside but more of a risk - cyber security. Protecting connected cars against hacking, especially while driving, is top priority. AZT is currently cooperating with the University of Regensburg to analyze and test cyber risks for vehicles and telematics devices.

Many believe that telematics is dramatically changing the way insurance works. Do you agree?
Christoph Lauterwasser: It’s certainly a key trend. At AZT, we have been conducting motor telematics tests since 2006. How telematics differs from traditional insurance is that it allows for personalized rates based on the “Pay How You Drive” principle. Drivers with safe driving behavior, who drive mainly during the day and in locations with low accident rates, will pay lower insurance premiums. Telematics also allows us to have a lot more interaction with our customers, increasing their awareness of Allianz’s services. That’s a good thing.

What role can insurers play in the area of connected cars and automation? What role does AZT play?
Christoph Lauterwasser: Insurance products must develop along with the development of vehicle technology. Also, our research and experience allow us to contribute to road safety and prevention. Allianz takes that role seriously and that’s why, AZT was set up back in 1971. Since then, we have been focusing our research on new automotive technologies in collaboration with auto manufacturers and suppliers. For example, AZT had been conducting crash tests in the 1980s to promote the mandatory use of safety belt. Overall, we have performed thousands of crash tests in the past 45 years. We also have a body shop at AZT to repair the cars we have crashed. In the past few years, we have been investigating not only the crash behavior of cars, but also the performance of assistance systems or telematics devices. In parallel, we analyze our own Allianz accident claims data. My team trains Allianz employees across the world on these topics and we participate in conferences that bring together experts from different organizations and regulators. That way, we also contribute to adapting the legal framework to accommodate new technologies that will enter the market.

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Bettina Sattler
Allianz SE
Phone +49 89 3800 16048
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