In a recent interview with CNBC, Lemonade CEO Daniel Schreiber said automated vehicles pose a stark disadvantage to large insurance companies, but the time is ripe for other people to take advantage of a new venture.
He was pointing to OEMs offering their own user-based insurance for his or her vehicles. As the discussion focused on how AVs will be insured, by who, it’s not just a question for self-driving cars, as CNBC and Schreiber hinted at by discussing Tesla insurance.
Tesla is an illustration of cars moving from being mechanical platforms to “computers on wheels,” Schreiber said.
“Which has profound effect on insurance. One question is who insures what? You go to Phoenix today and you order a ridesharing cab; a number of them can come without a driver. The master of the vehicle? The master of the service? The master of the insurance policy? …There’s likely to be massive dislocation within this entire sector and the data implications are profound and they aren’t great for incumbent insurers.”
Insurers are involved they’ll generate losses and customers when they switch to user-based insurance models, which Tesla and others offer by using live data feeds to assess how good policyholders are driving and base their premiums on that, Schreiber said. The traditional insurance model would be to take an aggregate average of the driving behaviors of a big group.
“If you have a $30 billion, $40 billion business as GEICO does, as Progressive does, based on pricing for an average you don’t want to adopt these technology because suddenly you would discover that 1 / 2 of your visitors happen to be overcharging and also you would need to reduce their premiums; that’s not good,” he explained. “And also the others, you’ll need to raise premiums for and lose them and that’s no good.”
Schreiber predicts the profitability of the car insurance market will shrink within the next decade.
“From zero, [there’s] this tremendous upside and lots of cannibalization that you can do into other people’s businesses by adopting these technologies just like this disruption takes place; as this dislocation hits this industry,” he said.
He also predicts accidents and car ownership will decline.
Aside from insurance, the future of automobile artificial intelligence and AVs results in many questions, concerns, and opinions, but is it too early in their development stages to create a viewpoint? Automated driving consultant and Forbes contributor Richard Bishop contends that it is inside a recent editorial he wrote criticizing a Washington Post editorial by Harvard Kennedy School visiting fellow David Zipper.
“… anyone who aims to state what ‘will’ happen as automated vehicle deployment scales up is jumping the gun,” Bishop wrote.
Zipper wrote the purpose of self-driving cars remains “nebulous” despite billions of dollars committed to their research and development during the last decade. He wrote that Google and other companies claim road safety factors are the reason behind the introduction of AVs because human error leads to most traffic crashes, but Zipper believes, “Like cars, autonomous vehicles were born not from public need but from technological opportunity.”
Bishop wrote that Zipper yet others have misunderstood AI and self-driving cars. He called Zipper’s “assertions” about AI concerning. “There is a fundamental misunderstanding in the blogosphere about AI that they appears to hold. AI is not ‘one thing.’ Each AI engine is exclusive towards the developers as well as their use case. Nobody would point to dysfunctional software and conclude all software is bad, however the media repeatedly does this with AI. Yikes!”
Bishop also noted that Zipper made his case against AI and self-driving cars over their negative effects on road safety, the environment, and traffic jam by citing systems from the 3 years ago.
“The performance of developmental systems such as this, from years back, tells us nothing about the capability of today's automated driving systems. The majority are still pre-commercial technology, in various stages of development and testing. Exceptional progress continues to be and it is being made at a rapid pace.”
Bishop contends that General Motors, Alphabet, Gatik, TuSimple, yet others provide AV commercial ride hailing services or freight delivery only after doing their research to ensure they’ll operate safely. Also, he noted that the National Highway Traffic Safety Administration requires notification associated with a crashes that advanced driver assistance systems and self-driving vehicles take part in.
Zipper left readers having a considered to consider: “It's obvious that companies want to maximize shareholder return; that's their role in a market economy. But automakers are still struggling to explain why, exactly, you should be excited about fraxel treatments, instead of alarmed by it. We shouldn't allow them to free unless we have a convincing answer.”
