Filed Under:Risk Management, Cybersecurity

How self-driving cars will change the rules of the road

Connected cars come with technology tools that insurers will find of great use. (Photo: iStock)
Connected cars come with technology tools that insurers will find of great use. (Photo: iStock)

The growing popularity of — and interest in — connected cars is presenting a plethora of opportunities for utilities.

Equipped with an internet connection, mobile apps and more, connected cars allow drivers to interact with their environment and utilities to service a new landscape.

At a growth rate 10 times as fast as the overall car market, with estimates that 75 percent of cars shipped globally will be built with connected capabilities by 2020, it will be hard to get away from this phenomenon. Consumer demand for sophisticated navigation, infotainment and driver assistance systems continues to escalate.

Related: Top 8 consumer concerns about self-driving cars

Telematics have been driving connected cars for years now. With both self-installed and professionally-installed solutions available, more drivers and their insurance companies are embracing the technology. Originally limited to a “black box” solution, today’s telematics now include opportunities across the OEM and mobile landscape.

As we saw earlier this year, even telcos like Verizon are jumping into the fray as well. According to Motley Fool:

For telcos like Verizon and AT&T, connected cars can diversify wireless service revenues away from the slower-growth smartphone subscriber and enterprise wireline businesses. The move also complements their growth into the Internet of Things, which provides connectivity to drones, wearables, home automation devices, and even entire smartcities.

Related: 5 reasons to embrace telematics for the connected car: What insurers need to know

(Photo: iStock)

Better Technology = Connected Car


Factors such as the rapid advances in computing power have given rise to connected vehicle innovation. A recent McKinsey & Company report says connected cars could account for 22 percent of all vehicles on the road by 2020 (up from 10 percent in 2015), and that today’s cars contain the power of 20 personal computers, have approximately 100 million embedded lines of code and can process data loads up to 25 gigabytes per hour. When compared to the Space Shuttle’s “measly” 400,000 lines of code used in its primary flight software, one can see the accelerated pace of technology (and why the Space Race is Over).

Further, connectivity infrastructure and hardware have vastly improved in recent years. Telecommunication providers are working to expand the coverage of 4G LTE, public “hotspots” are popping up everywhere and OEMs are designing automotive grade WiFi, enhanced Bluetooth technology and embedded cellular/GPS connectivity.

Beyond the technology advances, there is still one factor that has moved the needle most: the consumer and their response to the Internet of Things (IoT).

Related: Driverless cars: What are the insurance implications?

IoT and the Consumer


The IoT has changed the world as we know it. As consumers, we expect to be connected to our “things” whenever, wherever and however we see fit. The smartphone is an appendage that connects us to things around the globe.  Like Steve Austin, we feel we’re “better, stronger, faster” with our smartphones.

We now use wearables to monitor our bodies to ensure that we are healthy. Our home thermostats and lights are controlled remotely to ensure our comfort and to optimize efficiency. The ways we shop, pay bills, go to school and work have become connected–suffice to say, connected is the new normal. We expect our cars to be connected things, too.

Auto manufacturers embrace the opportunities IoT provides to meet the connected customer’s unmet needs. Beyond the current in-vehicle infotainment features (such as streaming a Spotify playlist to your car) and convenience options (like navigation systems), auto manufacturers also see potential to make the roads a safer place.

Related: New weapons in the war on fraud

They are releasing vehicle safety systems that allow vehicle to vehicle (V2V) and vehicle to infrastructure (V2I) connections to avoid crashes and reduce severity. According to the Department of Transportation, V2V and V2I applications notify drivers of “roadway hazards and dangerous situations that they can’t see through driver advisories, driver warnings, and vehicle and/or infrastructure controls.”

To the manufacturer, a connected vehicle and IoT is not only a means of creating a safer vehicle or a response to consumer need; connectivity also gives them the ability to manage the customer relationship and create additional revenue streams. Ultimately, these two work in harmony to create a more loyal service customer and increase brand consideration when it comes time to purchase a new vehicle.

(Photo: iStock)

Benefits


In addition to insurance incentives and improved customer service, the connected car benefits consumers in many ways:

  1. Personalized Driving Experience: From improved mapping data, in-vehicle Wi-Fi or Local Area Network hotspots, smartphone interfaces, weather alerts and traffic conditions, the connected car is truly focused on the individual driver and their journey.
  2. Road Safety: Connected cars can alert drivers to road closures, detours and conditions with enough advanced warning to avoid unpleasant trips. They can also automatically sense and prevent potential collisions based on external factors, as well as recognition of the driver’s behaviors. Emergency call functions are built in and eventually connected cars will also be able to monitor and assess a driver’s health and awareness–avoiding fatigue-based crashes, for example.
  3. Crash and Claims: Speaking of crashes, connected cars have the ability to immediately recognize a crash, allowing insurance companies to rapidly react to an accident, moments after it has happened, so that contact can be made with the policyholder in a proactive way (outbound vs inbound). The objective is to collect as much information as possible and “freeze” the crash scene. FNOL data is immediately sent to insurance companies, allowing them to process the claim more efficiently for the consumer, as well as immediately send a rental car while towing away the damaged vehicle. Overall, consumers will experience less headache and improved customer service from insurance companies in the event of a crash, as they act as a true a partner instead of a commodity provider. Touching base at the first moment of crash can also help avoid fraud attempts and third party interferences.
  4. Vehicle Diagnostics & Service: Fuel efficiency, maintenance needs, tire and brake health, fluid alerts and more are taken to a new level with telematics. Connected cars can alert drivers to regular maintenance needs and tie into a services plan with preferred dealers, creating an appointment with just one touch of a screen. Dealers can carry out remote diagnostics through the vehicle in advance of a visit, decreasing customer wait time in house and increasing the efficiency of service.
  5. V2E: Dubbed “vehicle to everything” by automotive supplier Delphi, V2E can enable drivers to connect with just about everything else in their life, including family, friends, home and office. Voice commands and hands-free controls allow drivers to remotely control not only their car but also items in the home such as an alarm system, lighting, garage door or HVAC system. Imagine you’re driving home from a long holiday trip, it’s snowing and you ask the car to turn on the driveway lights and home heat so the house is warm when you arrive.

Related: Rewriting the rules of the road for automated driving

(Photo: iStock)

The aftermarket solution 


The trend seems to be connecting new vehicles, but what about the 233 million vehicles on the road that lack embedded connectivity? Although most people are driving cars that are nearly 12 years old, aftermarket solutions exist that can connect our older cars today.

OBDII dongle devices used in usage-based insurance programs can provide countless safety and security service applications that can connect the car, improve a consumer’s quality of life and fill unmet needs. For example, in the event of an accident, these devices are capable of notifying an insurance provider so that they can dispatch a tow truck or arrange for a rental car. This technology can also alert first responders if an accident may result in bodily injury. Just take a look at e-call in Europe; this service reduces accident response time by 50 percent, saves hundreds of lives and reduces the severity of tens-of-thousands of injuries annually.

Further, dongles can provide vehicle location, giving parents peace of mind to locate their teen driver, or assisting in stolen vehicle recovery. These devices can even diagnosis DTC codes to save customers money and prevent inconveniences related to battery drain, coolant problems and other service issues.

Clearly, the future of the connected car is now and consumers, and manufacturers are harnessing this power today while utilities drive us into the future.

Related: Feds outline plans to regulate autonomous cars

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