Driverless Cars: The Cyber Revolution

The past 12 months have seen an increased focus on the move to fully automated vehicles. In what is a clear response by the auto industry to the increased demand for connectivity and "on demand" services, we hear promises of increased efficiencies, lower emissions, reduced accident rates and better driver experience. With the adoption of fully automated vehicles appearing to be inevitable, the landscape for insurers operating in this space will be a challenging and rewarding one.

Current landscape

The auto industry has never feared technology. Semi-automated vehicles using driver-assist technology are now commonplace. Vehicle manufacturers produce vehicles with advanced mobile technology components, with many on-the-road vehicles having wireless technology or the ability to connect to a personal or public network.

Businesses are already using connected cars to offer consumer and business services and to manage fleets and logistics. And telematics are commonly used by insurers and other industries to monitor, manage and assist drivers. So it is no surprise that the industry is looking at the next big step.

Google started its self-driving car project in 2009 in the United States and major manufacturers such as Tesla, Mercedes, Audi, BMW, Volvo and General Motors are developing vehicles featuring varying degrees of automation.

Australia at the forefront

Experts predict that the driverless car industry will be worth USD 90 billion in 15 years and Australia is already placing itself at the forefront of this change.

South Australia is leading the way with the introduction of the Motor Vehicles (Trials of Automotive Technologies) Amendment Bill 2015 in September 2015. This provides exemptions from existing laws to accommodate automated vehicle testing on public roads.

Media reports tell us Telstra, Volvo and Bosch have already conducted the first trials of driverless cars in South Australia. Australian company Cohda Wireless was instrumental in this testing and has been at the forefront of development of vehicle to vehicle (V2V) and vehicle to infrastructure (V2I) technology, which lies at the heart of driverless car systems.

With the introduction of more advanced technology, insurers operating in the Australian market are faced with a number of opportunities and challenges, both in terms of development of new products and in the ways in which their business manages the risks relating to such change.

Opportunities

Perhaps the most significant...