Listen up auto insurers. Driverless Cars? No Problem. Collision Avoidance Technology? Hold On!

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23 June 2015
Donald Light
The just released report by the National Traffic Safety Board (NTSB) contains some important findings on collision avoidance systems’ potential to prevent or mitigate the severity of rear-end collisions. Some of the data points are eye-popping: a predictive analysis found that this technology could prevent or reduce deaths and injuries in 87% to 94% of all accidents. A private study by the trucking firm Con-way found that these technologies reduced rollovers by 41% and rear-end collisions by 71%. Still impressive, but less startling, the Insurance Institute for Highway Safety found a reduction in claims frequency in three luxury models of 7% to 14% (without estimating changes in severity). The good news for driver and passenger safety is that auto manufacturers are competing vigorously to offer these features in their new cars and trucks (The NTSB study has a 9 page Appendix listing these manufacturers and models). The NTSB study may also nudge the National Highway Traffic Safety Administration to, someday, mandate these technologies in new vehicles. The long term implications for auto insurers though are similar to the implications of autonomous vehicles: fewer and less severe losses, resulting in competitive and regulatory pressure which will drive down premiums substantially. The auto insurance business is going to shrink. But the real question is how fast? Or to put the question more precisely, when will there be a critical mass of autonomous and collision avoidance-equipped vehicles on the road? The NTSB study is speeding up that timeline just a little bit.

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