Other parts of this series:
While Silicon Valley and auto manufacturers have shown great enthusiasm about self-driving cars, up until recently consumer confidence seemed to lag behind. Drivers cited safety concerns and affordability as the main reasons of their hesitation about autonomous vehicles.
Now, it seems the tide is turning. Fortune magazine reported in May that the average driver would be willing to pay nearly $5,000 more for a fully automated vehicle. Researchers from Cornell University found that the average U.S. household is willing to pay $3,500 for some automation and $4,900 for full automation on top of an expected price of a new car.
If the consumers are beginning to embrace this new technology, it’s time for auto insurers to do so, too. That’s exactly what our latest Accenture report recommends: “The rate of adoption for autonomous vehicles can be debated, but there is little doubt that such vehicles will eventually predominate the world’s highways. Automobile insurers should embrace, rather than fear, the future.”
Here’s how insurers can get ahead of competitors and gain an early advantage:
Become the king of big data. Participants in the autonomous-vehicle market with the ability to collect, organize and analyze the most data will have inherent advantages over those with less developed capabilities.
Begin the actuarial and modeling process. Now. Insurers should adapt current actuarial and modeling techniques to be ready as self-driving cars add more and more autonomous features.
Chart a course in the partner ecosystem. Start actively identifying and mapping out potential cross-industry partners. You will need to collaborate with providers of communication and software systems, governments at multiple levels, and many other entities.
Rethink business models and culture. Traditional insurers whose revenues derive primarily from personal automobile policies (insuring thousands of small risks) will have to transform themselves into large commercial insurers writing policies on a small number of very large risks. This will entail major changes in areas including product development, policy administration and distribution.
The insurers taking these preemptive steps will be the ones that survive and thrive as autonomous vehicles proliferate on roads and highways, both here in the U.S. and globally.