Auto safety technology killing auto insurance industry?

- Dec 27, 2019-

Auto safety technology such as ADAS or auto insurance industry in crisis?


According to foreign media reports, in order to avoid driving accidents, major car companies are speeding up the introduction of new technologies, but insurance companies are becoming cautious as consumers predict that the purchase of anti-collision braking insurance and adaptive endurance control insurance may be given preferential treatment in the future.


The market value of ADAS in the world is expected to exceed US $67 billion by 2025, with an annual increase of more than 10%. 20 car groups have announced that all new cars will be equipped with front collision warning system and city speed automatic emergency braking system by 2020. The government's requirement to install anti-collision automatic brake system also promotes the development of ADAS market, which is also the guarantee of profits for high-profit models.


Kevin Clark, chief executive of automotive technology supplier anbofu, said: "owners who choose to buy cars with advanced safety solutions will not regret it." According to Clark, the cost of advanced safety systems, including automatic braking, lane keeping and adaptive endurance control, is relatively low for car companies, between $500 and $1000 per vehicle. "Car companies can price this, and consumers will pay for it," he said Anbofu expects that the new business scale of ADAS will exceed 4 billion US dollars this year.. "We are not in a position where we had only five customers a few years ago, and I believe we will have 20 in the next few years," Clark said


Adas reduces accident rate by 25%


The insurance industry sees this differently. Although the profit of personal automobile insurance business is relatively low in general, it provides a lot of cash flow to insurance companies. It is reported that in 2018, in the U.S. market alone, the direct underwriting expenses generated by the business have exceeded 244 billion US dollars. Auto insurance is also seen by insurance companies as one of the ways to cross sell other more attractive products to consumers.


According to Swiss Re, the world's largest automobile reinsurance company, and here, the mapping company, ADAS has the potential to reduce the frequency of automobile accidents by 25%, and by 2020, it is expected to reduce the insurance costs of the world's vehicles equipped with ADAS by 20 billion dollars. But American insurance companies believe that they do not have enough data to prove that the autopilot system can protect vehicle safety. They pointed out that car companies refused to provide details of the models equipped with these technologies, lacked consistency standards, drivers could not predict the use of the system, and maintenance costs were high.


Allstate Corp Steve Armstrong, vice president of pricing, said: "we don't believe in data, nor do we launch any form of wrong discount to promote at this time. We just want to confirm that this rate is a reflection of the risks posed by ADAS technology. " Shantelle Thomas, another president of Costco's pricing division, said that over the next five years, premium rates will reflect the advantages and costs of modern automotive technology, but will not be presented as discounts.


Other insurance companies have expressed similar views. Jennifer st, head of auto claims, weishifei insurance. "We're in a fuzzy middle ground, ADAS has shown its strengths, but in reality, there's a lot of commonality," says John

Insurance companies consider high repair costs a risk. Sensors and cameras are the core of the autopilot system, and they are usually installed on bumpers or windscreens of automobiles. The AAA study found that even in a small crash, if the sensor is damaged, the cost of repair will double.


Richard Lavey, executive vice president of the Hanover insurance group, said: "the repair cost of the bumper will no longer be $300 in the future, but will be close to $1500 now."


State Farm said in a statement that it will not offer insurance discounts to vehicles equipped with ADAS system, and the future insurance rate will be determined by a variety of factors, including safety, regulations, insurance industry, debt and repair costs.


Data deficiency

With the new autopilot features constantly coming out, insurers find it hard to track the data. The front collision warning system with automatic brake is considered to be one of the most safe systems among many driving AIDS. In a recent study of high-speed safety, the insurance agency found that automatic braking can reduce injury accidents by 56%.


However, most ADAS systems are still sold as additional equipment, which makes it impossible for insurance companies to confirm which function is installed in the vehicle. Insurance companies also believe that car owners can correctly identify the technology installed in the car.


IIHS and British Thatcham research institutions found that, after road test of automobile technical performance, ADAS is not only different in performance and description of each vehicle enterprise, but also different in different models of the same vehicle enterprise.