In this Opinion piece Nikolaus Suehr, CEO and co-founder of KASKO, takes a look at the insurance issues that will come into play once we are truly living in an age of self-driving cars.
I am not an autonomous vehicle expert, let’s just get that one out there before I continue. But, I am definitely well versed in insurance and I am a ‘techie’, no coincidence given I am the co-founder of an InsurTech startup. Some of you might be aware that my Father founded an insurance intermediary specialising in classic cars, but I can promise you, I haven’t pulled too much from conversations with my dad for this post. Classic cars are many miles away from autonomous vehicles and the seemingly hundreds of start-ups with automated travel in mind.
In the transitional years, when we move from having no autonomous vehicles on the roads to some, and then many as they become a dominant driving force on the world’s motorways and city streets, there will be more risks in terms of insurance.
The vehicles themselves, are of course going to have to be as tight as it gets in terms of digital security – it doesn’t take Philip K Dick to imagine the carnage that would unfold when a hacker gets hold of one, or ten, or a thousand automated vehicles does it?
You might think it is bad now, with the daily article on how Facebook is bending the rules of trust with your data, or how Amazon allegedly serves you ads for almost everything you have ever discussed in front of your Echo device.
But think about how much data we are going to hand over to autonomous vehicle manufacturers and service operators. I say, operators, because fewer and fewer of us are going to actually own the cars – mobility as a service is sneaking into our day-to-day lives, and with it, we are becoming accustomed to providing the data needed to run services at full, cost-effective rates.
But for me, the big safety net is going to be needed when exploring the services that come with Mobility as a service. In recent weeks there have been a number of airports shut down simply with a drone or two. Smart cities of the future are going to need rethinking with military-level security. Imagine the costs at stake for shutting down infrastructure to future smart cities. Not just financially, with roads blocked, power down, patients and Doctors not making it hospitals, teachers to schools, politicians to parliament and so on. London for instance, even for an hour, being shut down, would lose multi-digit millions.
INCREASED CYBER RISK
No longer is cyber security the task of one engineer adding a top layer of security, cyber is such a monumental risk for the industry as a whole that it must be managed from the boardroom down. The workers in the basement IT departments are going to quickly see an ascent to the top floor. With mobile phones, for example, Apple and its compatriots have been good at keeping software and security up to date for a while – and giving warning when a certain model simply isn’t worth continuing with. Yes, they are still expensive devices, but imagine that with cars – I don’t see it happening – cars and other autonomous vehicles will have to be updated for their lifespan. Not updating your phone is your risk, but what insurances are there to protect against the businessman or businesswoman that needed to get to the office quickly and decided not to update – that won’t be allowed to happen will it?
If you simply set your car update to “Remind me tomorrow”, like with your laptop or your phone, could it have catastrophic consequences?
And there it is, is insurance ready for this? I leave the cyber experts to discuss the legal definition of driver vs. manufacturer liability. I’m more focused on whether insurers can manage the connectivity challenges that will be required to inject their risk transfer and mitigation services into the mobility services of the future.
People who read my writing will know that Legacy IT setups, not their own doing, take a while to turn around new products, which is why we at KASKO have worked with some of the world’s biggest and best insurers to provide products quickly, that are flexible – in keeping with our startup values. We have gone from the boardroom to launch in three to four weeks not two to three years.
I plug this because thanks to Tesla and friends, we have seen an awful lot of development and it is realistic now that in some years (5, 1,0 or 15 is really beside the point here), we will see self-driving cars everywhere.
Plucky startups have appeared from nowhere – changing the game. The car giants are pumping in billions to catch up and acquire the start-ups. But the car industry, like Insurance, is traditionally slow. This is changing with more manufacturers adopting digital-first models, but the costs involved in development are still huge and it may be a while until we see the long-term outcome.
We have time to consider how insurance will be impacted, but without the support of companies like KASKO – how on earth are we going to keep up with a world of personal transport that is about to go through more change since the Wright brothers first took off from Kitty Hawk?