The Changing Landscape of Insurance: Autonomous Trucks on the Horizon
Rapid advancements in self-driving technology are set to transform the American trucking industry, creating significant shifts for the insurance sector.
According to Deloitte, an estimated 380,000 long-haul truck drivers could be replaced by autonomous vehicles (AV) within the next five years. This shift presents major repercussions for the insurance industry, potentially resulting in a loss of approximately $3 billion in workers’ compensation premiums. Additionally, this transformation will significantly impact commercial auto, product and professional liability, and cyber insurance lines, the global consulting firm reported in a recent study.
“Companies that focus on both commercial auto and workers comp insurance associated with long haul trucking are going to have to figure out how to pivot and continue to grow their portfolio as premiums from those products go down,” said Matthew Carrier, transformational projects lead at Deloitte and industry advisor for the property & casualty (P&C) space.
The Impact of Autonomous Trucking on Insurance
A Deloitte survey revealed that around half (51%) of transportation providers and manufacturers in the US and Europe are actively implementing autonomous vehicles for fleet transportation. A major benefit of self-driving trucks is their ability to alleviate supply chain challenges and address driver shortages.
Carrier noted that while some workers’ compensation carriers may have diverse portfolios to offset losses, other insurance lines will also experience significant change. “Insurers need to be thinking about both the front end – the underwriting, the premium, and the risks that are involved – and the back end, which is the complexity of claims and how they’re going to adjudicate them.”
Insurers must adapt to the new exposures created by self-driving trucks, as many of these are not covered by traditional commercial auto policies. “Companies that are writing exposures in the long-haul trucking space via commercial auto, workers’ comp, or even some of the marine inland marine coverages that apply to long-haul trucking, need to consider the shift in exposure,” Carrier told Insurance Business.
Unlike traditional commercial auto insurance, where a large percentage of losses come from human factors such as distracted driving and illegal maneuvers, autonomous driving will shift the focus of exposures. New exposures could arise from the manufacturing process or even cyberattacks.
According to Deloitte, there is currently insufficient data to establish that autonomous trucks are less likely to be involved in accidents compared to those driven by humans. “Carriers need to know what the exposure looks like and start to model that for their traditional coverages, and maybe new coverages that they need to be thinking about creating,” said Carrier. “On the claims side, it’s about making sure you have the right expertise and legal representation to deal with the exposures you may not have seen historically.”
Navigating the Challenges for Brokers
For brokers, the challenge lies in securing appropriate coverage for trucking firms adopting autonomous driving technology. Carrier identified several ways that insurers and reinsurers are entering the market. “We are seeing reinsurers interested in teaming up with direct writers on different kinds of opportunities and new types of risks,” said Carrier.
“One thing for the brokers to think about, if they’re struggling to find a market for the risk is to have some conversations with the reinsurance companies, because they’re interested in testing the waters to understanding how the exposures could work. Some of the large reinsurers may understand the markets that traditional brokers may not have exposure to. So, I would point in them in that direction to have some conversations and figure out where the new markets are emerging.”
The Road Ahead for Driverless Trucks
While self-driving vehicles have made significant progress, and investments in this area are increasing, several obstacles must be overcome before the technology can be widely implemented. The Deloitte study found that AV technology needs to improve navigation in adverse weather conditions and operations outside of highways. This means human drivers will likely handle parts of the journey, such as the more complex routes to warehouses.
“In long-haul trucking, which is mostly interstate driving, autonomous driving is already happening in some test pockets, and I think that’ll continue to expand,” Carrier said. Regulation will also play a crucial role in determining how quickly autonomous driving is adopted in the trucking industry, Carrier added. “A combination of technology and legislation adoption needs to happen, both within states and federally. So, it’s hard to predict exactly when that will happen, but I think in the next five years you’ll start to see some developments.”
