Overcome a lack of trust, confidence and data to accelerate autonomous vehicle deployment

The arrival of cutting-edge technologies can be a mixed blessing. On one hand, there is the vast landscape of untapped potential, an exciting vision of a changed and improved future. But on the other is often the fear of the unknown, the untested and the unsure.

In her presentation to Intelligent Insurer’s Underwriting Innovation Europe virtual event on June 28, Andrea Kollmorgen, head of connected emobility at Siemens, will explore how insurers can use synthetic data to build an accurate and, importantly, trustworthy picture around autonomous vehicles.

This, she proposes, will help carriers develop solid underwriting processes ready for a technology that has the potential to transform mobility without having to wait for real-life data to emerge, and lose any first-mover advantage in the market.

Why is there a lack of trust?

It’s more about why trust is so important for autonomous vehicles: because they are designed to be technologies with purpose, they are needed by society. Around 1.35 million people die every year in road-based accidents with 90 percent of those caused by human error.

On top of this, there is an estimated $2.2 trillion worth of economic loss generated worldwide due to congestion. Autonomous vehicles are designed not just as fancy technology but to save lives and minimise loss.

There needs to be more transparency and independent validation about safety and traffic impact claims from technology developers. For communities to adopt autonomous vehicles, the technology will need to be developed in public view and with the community.

How can trust be established?

Autonomous vehicles are a new technology and probably a new economy. New jobs will be created and there are new opportunities for mobility equality if it’s done well. But it has to be developed in an ecosystem: there can’t be development siloes where technology is just rolled out overnight into cities.

All parties need to work together to make sure the support network is in place—for autonomous vehicles this will be vital as the technology challenges are being mastered as well as during the lifetime of autonomous vehicles.

How will the parties in that ecosystem build a picture of how this will look without any real-world data?

It is the tough part. There’s a combination of simulation and real-world testing that is being used to develop the technology and when these vehicles are deployed we need to use the same logic.

For instance, insurance companies need to understand what the risks and severity of accidents might look like in early days. Together the ecosystem will be building libraries of simulated driving data in digital replicas of deployment areas that can then be augmented by driving activity in the real world.

How should insurers continue to adapt to autonomous vehicles?

What we hope is for insurers to be enablers of new technology—we see this as an overwhelming sentiment in the industry. A new mindset is required to understand and use tools like massive simulation engines to make sure they are additive.

We don’t want the lack of 100-plus years of driving data that we have today for human drivers to become an inhibitor to this life-saving technology. Now is the time to start evaluating technologies to deepen our collective understanding the role of synthetic data.

It’s important to run simulations that don’t just run with zero incidents, but also circulate round the complex edge cases so the impact on risk profiles can be deeply analysed and ultimately priced.

It won’t be a straight swap: autonomous for traditional vehicles. How will insurers manage a ‘two-speed’ driving landscape?

We have standard and autonomous vehicles moving around together for a very long time so there is a need for two approaches. We’re talking about a brand new technology and brand new industry so now is the time to start defining that category. Already today we see the impact of increased automation within insurance: frequency of incidents is going down but the severity is going up due to expensive sensor technology, onboard computers and heavier vehicles getting into crashes. That’s burning a hole in companies’ pockets and eroding the bottom line

Carriers also have a make or buy decision in the near future and in some cases these decisions could be existential: do we wait it out to see what new insurtech entrants are doing?

Some car manufacturers are taking the same route with core autonomy. They are still focusing on traditional vehicle production but investing into or spinning out a group specifically to look at a strategy towards their own software-driven machines. Insurance companies may seek to take their product build in-house or outsource—here is where we want to partner with the industry to help with building out a competitive, strategic market entry product portfolio including post-incident offering.

When new technology provides existential threats, I think it’s always best to be in the proverbial driver’s seat for my own future.

What do you hope will be the takeaway from this session?

We aim to start a discussion around autonomous vehicle and automated vehicle policy.  This is going to go beyond today’s emerging dynamic pricing policy models. In the past, you would underwrite a ‘human driver’ policy and it would be updated at a defined interval or after an incident.

Now we’re talking about software code driving vehicles with varied intents: people moving or goods distribution, for example. The code is different from one company to the next and it is also regularly enhanced and updated.

There’s a continuous need to understand the dynamic risk in the contextualised driving environment of these vehicles but also the software changes involved. This is why simulation is so important. We can’t pull autonomous vehicle fleets off the road every time there’s a hotfix (quick-fix engineering update) or software update just to check that they’re still safe and within the scope of the policy.

Using digital tools to understand the consequences is the only way to get around the challenge and equip the insurance industry with the data necessary to understand a complex, dynamic risk environment that we have not seen on our roads and communities before

Andrea Kollmorgen, head of connected emobility at Siemens, will be speaking on June 28 at Intelligent Insurer’s Underwriting Innovation Europe Virtual Event (June 28–30, 2021). The event is free to attend for insurers and brokers/agents, but you must register in advance. Sign up to access the content live and on demand here.