Auto Accident Avoidance Technologies
Why features like auto-braking and driver monitoring don’t always translate to reduced claims.
For many of these new technologies, it seems reasonable to assume that adoption will mean a concomitant reduction in the frequency of auto accident claims, but is that what is happening in real life?
Karlyn Carnahan, principal of insurance at Novarica, differentiates between several kinds of technologies, including those that help the driver and make her safer by monitoring wakefulness or measuring blood alcohol content via sensors on the steering wheel. “Then there are smarter telematics, things that reduce engine power or stop the engine to avoid an accident,” she says.
“I believe [accident reduction] will happen,” she adds. “But we don’t have accurate data right now to enable us to predict that. When you look at the things [automakers] are doing, it will absolutely reduce frequency; it will even reduce the severity.”
Greg Horn, vice president of industry relations at Mitchell, agrees. “It will happen, but we have to look at what type of technology we are taking about. Is the technology active or passive, meaning does the car avoid the accident automatically through auto-braking or steering? Or is it a warning that can be ignored by the driver?”
He notes that passive technology, like anti-lock brakes or the center-mounted tail lamp, have had an initial impact on reducing accidents, but drivers have grown accustomed to these features and may be inclined to “over-trust” them.
According to Donald Light, director of Celent’s property/casualty practice for the Americas, “It depends on the proportion of vehicles on the road with various collision avoidance technologies on board. There needs to be a critical mass to have a real impact—probably over 20-30 percent.” He agrees that these technologies also will reduce the severity of accidents, “which could be significant.”
Because new accident avoidance technologies seem to be coming out each year, one could also ask whether or not these technologies are sufficiently mature to allow us to gauge their effect on overall risk.
“The active technology is only available as an option on a very small number of cars,” says Horn. “The average age of a car on the road is now 11 years old. We are just seeing dual front air bags and anti-lock brakes in the majority of the cars on the road today, and these technologies were introduced in the 1990s.”
Carnahan agrees that there is not enough actuarial evidence to gauge overall effectiveness of these technologies. She adds that as accident frequency drops, “average severity” of accidents will rise based on the numbers (because there are fewer smaller accidents, thanks to the increase in these technologies).
“As we reduce auto claims, it also reduces a lot of the cost for auto repairs,” she states. “A greater portion of claims will be medical.” As a result, she says that carriers will have to focus more on the medical case management side.
“Some technologies, like adaptive cruise control, are reasonably mature,” says Light. “Others—like night vision and heads-up displays—are in a much [earlier] stage. As for their impact on losses, it requires a combination of mature (i.e. reliable) technologies and share of vehicles on the road.”
Which Technologies Make Sense?
Among the various accident avoidance options available, which make the most sense? Light notes that things such as automated parallel parking will have little or no effect on losses. “The biggest impact will be from autonomous emergency braking and from side-object detection systems,” he says.
“The technologies that make the most sense are those that make the car smarter,” according to Carnahan. Such devices don’t require any change of behavior by the driver, she notes, pointing to technology that will automatically slow a car’s speed on a curve if the vehicle is traveling too fast.
Other technologies may be considered by some to be an invasion of privacy, such as tools that measure a driver’s blood alcohol content or that monitor the wakefulness of truck drivers, she notes. “If I have to change my behavior, [the technology] is less likely to be effective—and I still have to have ability to turn it off.”
“Autonomous braking, which uses front-facing radar and stops the vehicle in the event the driver doesn’t begin braking soon enough, seems the most beneficial,” says Horn. “Many other technologies are passive, requiring driver input and, therefore, are prone to more error.”
He reminds us, however, that even sensible technologies are not foolproof. “There are several videos circulating on the Internet of tests where the technology has failed completely,” says Horn.
Effect on Premiums
Another key question is how accident avoidance technologies will affect premiums. “Theoretically, they should help to bring premiums down,” says Carnahan. “As accident frequency drops, smaller claims are eliminated. But this has to be coupled with inflationary trends and the fact that medical costs are rising. The best we can hope for is that technology will help costs to remain stable.”
Horn agrees that there will be a reduction in frequency of accidents, but adds that the cost of replacing some of these technology pieces—such as an adaptive radar sensor mounted in the grill of a car—will be expensive. “So the question is: Will the reduction in frequency outweigh the additional repair costs when those vehicles are in accidents?”
“Over time, there will be a significant impact on insurance premiums,” says Light. “This will be augmented by telematics and automated traffic law enforcement, like red light and speeding cameras, and, in 10-15 years, driverless cars.”
It is also reasonable to ask whether or not these technologies are sufficiently reliable and thoroughly tested, or if we are headed for an increase in claims related to the technologies themselves?
“All technologies fail at some rate,” says Light. “Yes, there will be greater exposure for auto manufacturers and manufacturers of the various collision avoidance technologies, but it is unlikely that those new sources of premiums (commercial) would come close to replacing reduced premiums from personal auto insurance.”
Carnahan argues that it is difficult to know that a vehicle technology will always do what it is supposed to do. “Some may fail, so there may be a case to say, ‘I relied on that technology.’”
“While tested and ‘ready for public consumption,’ there are several issues with some of the first-generation technologies,” says Horn. “For example, blind spot cameras are prone to false alarms in heavy fog or rain. Autonomous braking systems can fail or be delayed if the sensor in the grille gets caked in mud.”
Overall, however, Light believes accident avoidance technologies will become “increasingly important in terms of increasing auto safety, decreasing auto insurance losses, and—sooner or later—reducing premium costs.”
Carnahan also sees growth in these devices, as manufacturers strive to make their vehicles smarter and to improve telematics. The latter will be enabled by better broadband technologies, she notes. “Vehicles [in accidents] should diagnose themselves and automate claims notification. This helps claims settle quicker, thus reducing expenses.”
“Like all electronic technologies, costs will go down as sales of accident avoidance-equipped vehicles increase,” says Horn. “The lower cost will allow the equipment [to be installed in] more new vehicles, and the accuracy of the equipment will improve as time progresses.”
He adds, however, that it will be “at least 15-20 years before we see a significant impact on the number of collisions.”