The whole transportation sector is in for massive transformation. The way that people and goods will be moved from point A to point B in the future will be completely different. I am not (yet) talking about a Star Trek-style transporter, although scientists have moved matter at the atomic level from one side of a room to another, so we may eventually get there.
The transformation I want to focus on is much closer. Consider the future that the young children of today may experience. They may never own a car, or understand what it means to hail a taxi, or even rent a car. The next generation will find it odd that we used to put “gas” in our vehicles and may think of driving a vehicle as something that you do in an amusement park. Imagine the future at Disney World, standing in a long line waiting for the new “1978 Camaro ride.”
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When you consider the impact of telematics, electric vehicles, the sharing economy, autonomous vehicles and new modes of transportation – like the Hyperloop or the fleet of drone taxis that Dubai plans to have in operation by 2020 – you start to see that these developments are not just science fiction. They are becoming science reality.
Collectively, these technologies and trends have the potential to dramatically reduce accidents, improve safety and optimize vehicle usage, which are great benefits for society as a whole. For insurers, however, this is a mixed blessing. Insurers have always been some of the biggest proponents of technologies that improve the safety of vehicles. But the potential to dramatically reduce accidents also comes with the probability of dramatically reduced premiums – the bread and butter of many P&C insurance companies (for both personal auto and commercial fleets).
SMA’s view is that these key trends in the transportation segment – telematics, autonomous, electric, the sharing economy, safety tech and new modes of transportation – will converge around 2030 to create a completely new environment. But the transformation has already begun. Telematics is already gaining traction. Uber and Lyft are examples of the sharing economy that are disrupting taxi and livery industries and offering new ways for people to travel without having to own a car. Autonomous vehicles are in the news and on the roads, with significant testing underway. Advanced driver assistance systems (ADAS) like collision-avoidance systems and lane departure warnings are becoming standard options in many new cars.
The role of geospatial data and analytics is one aspect of this transformation that has been underreported. Today, insurers gather mostly static data about the driver, the vehicle itself and the usage of the vehicle. Telematics is providing more real-time data, but a very limited subset of that data is now being used. In the evolving real-time connected world, geospatial data and insights will be required to provide context.
In order to better understand real-time risks, provide advice to policyholders, offer new location-based services and respond immediately to accidents, insurers must have geospatial awareness. This entails knowing the exact location of the car, real-time conditions that are relevant for safe driving (weather, construction, accidents) and location information on the nearest partners (EMS, towing, rental car, etc.). In addition, when an accident occurs, it may be useful to have information about the surrounding infrastructure and topography. Insurers are accustomed to using historical data to underwrite and price policies, and then post-incident assessments to try and reconstruct what happened in an accident. In the real-time, connected world, this will not be good enough. Insurers must have the ability to collect real-time data from the vehicle itself, pair that with relevant geospatial data from external sources and analyze that data to create recommendations quickly – in some cases, in seconds.
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As key forces in the transportation sector continue to advance, many issues will need to be addressed, including regulations, liability and changes to the roadway infrastructure. The transition to a world of driverless vehicles, limited car ownership and new modes of transportation may take decades, but the effects are already being felt, and insurers should be planning for the transformation now. Understanding how to acquire, manage and analyze geospatial data should be a key focus area for any insurer that writes vehicle insurance.
