RUCKERSVILLE, VA. (Reuters) – Automakers are accelerating the adoption of accident prevention technologies, but insurance companies are cautiously warning consumers of discounts on the purchase of collision-avoiding brakes or automated cruise control.
Philip Floyd, chief engineer of the Insurance Institute for Highway Safety (IIHS), demonstrates a front crash prevention test on a 2018 Tesla Model 3 at the IIHS HLDI Vehicle Research Center in Ruckersville, Virginia on July 22. 2019. Photographed July 22, 2019. REUTERS / Amanda Voisard
The global market for advanced driver assistance systems, known in the industry as ADAS, is expected to reach more than $ 67 billion by 2025 and grow more than 10 percent annually , A group of 20 automakers has committed to provide nearly any new vehicle with a forward collision warning and automatic emergency braking at city speed by 2020, promising to win these higher-margin vehicles.
"Anyone sitting in a car with advanced security solutions will not return," said Kevin Clark, managing director of auto engineering supplier Aptiv PLC to Reuters. The cost of advanced safety systems – automatic braking, lane keeping and automatic cruise control – can be relatively low for the automaker, between $ 500 and $ 1,000 per vehicle, Clark said.
"The (manufacturer) can pay a price and consumers will pay for it," he said.
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Aptiv expects new ADAS business over $ 4 billion this year. "We switched from five customers to five customers a few years ago, and I think we'll have more than 20 customers in a few years," Clark said.
The perspective of the insurance industry is different.
Although private motor insurance is traditionally a low-margin business, it offers insurers the largest amount of liquidity. In the United States alone, more than $ 244 billion in direct premiums were generated in 2018, according to National Association of Insurance Commissioners data. Car insurance is also seen as a way for insurance companies to sell other, more lucrative products to customers.
According to Swiss Re AG, the world's largest auto-reinsurer and mapping company HERE, ADAS has the potential to reduce the incidence of traffic accidents by up to 25%, and global insurance premiums for cars with ADAS equipment by 20 billion by 2020. USD Down
However, US insurers said they did not have enough data to validate the safety benefits of automated driving systems promised in the auto industry.
They cite the reluctance of car manufacturers to provide detailed information on the models sold with these features, a lack of consistent standards, drivers' unpredictable use of the systems, and higher repair costs.
"We will not violate the data at this time and make false rebates for marketing purposes." We just want to make sure that the interest rate reflects the associated risk, "said Steve Armstrong, vice president of pricing at Allstate Corp., one of the largest US insurers.
Shantelle Thomas, also Vice President of Allstate Price Division, said insurance premiums would reflect the benefits and costs of modern automotive technology over the next five years, but not necessarily as a discount.
The mood was confirmed by other insurers.
"We are stuck in a dull interim phase," said Jennifer St. John, national director of motor vehicle claims at Westfield Insurance. "ADAS has shown that it has benefits in practice, but there is really no common ground in what's out there."
The insurers pointed to higher repair costs as a risk. Sensors and cameras, which are of central importance for automatic driving systems, are usually installed in the bumper or windshield of a car. AAA research has shown that repair costs can double even with minor collisions if such sensors are damaged.
"There's no $ 300 bumper left today, and repair costs are now close to $ 1,500," said Richard Lavey, executive vice president, The Hanover Insurance Group.
State Farm stated in a statement that there are no special discounts for driver assistance systems and that future rates would be affected by a number of factors, including safety, regulation, risk taking, liability and repair costs.
GEICO has not responded to comments
With the rolling release of new automated driving features, it is difficult for insurers to keep up.
A forward collision warning with automatic brakes has been found to provide one of the greatest safety benefits of various driver assistance systems The Road Safety Institute recently came out in a study the conclusion that Automatic braking could reduce accidents with front-to-back injuries by 56%.
However, most ADAS features are still sold as optional equipment, so insurance companies can not verify which features are ultimately available for a particular car. Insurers are reluctant to trust car buyers to correctly identify the technology their vehicle is equipped with.
Advanced security features differ not only in performance and description between different manufacturers, but also between models from the same automaker. This emerges from studies by IIHS and its British equivalent, Thatcham Research, which conducts road tests to evaluate the performance of security technologies.
"The only way to get a fair price is to get more data to understand what a vehicle has and whether it makes a difference," said Matthew Avery, Thatcham's research director.
These data are not sufficiently provided by manufacturers, which often cite corporate and competition law reasons, said Tom Karol, General Counsel of the National Association of Mutual Insurance Companies, whose members assure more than 170 million US car insurance customers.
Automakers and insurers claimed to deal with the data problems. According to Barry Engle, head of GM's North American operations, General Motors Co has a team dedicated to ADAS and insurance.
Engle expects better information, the insurance industry would react positively. "To the extent that is not the case, we need to communicate better together," he said.
Swiss Re is at the forefront of developing a global ADAS risk score and mechanism that allows automakers to submit data to Swiss Re, which in turn recommends discounts to auto insurers.
"If we say these cars are safer, insurers are more likely to believe us if we take the risk," said Sebastiaan Bongers, product and technology chief of Swiss Re, as a reinsurer of consumer-oriented auto policies.
Bongers believes that reducing accident frequency and severity will eventually offset higher repair costs. However, lower premiums could lead to temporary liquidity problems in the insurance industry in about ten years.
Swiss Re has partnered with German BMW so far and is in talks with other automakers to develop a comprehensive system.
Reporting by Tina Bellon; Additional reporting and editing by Joe White; Editing by Edward Tobin