Who should pay for a self-driving crash? B

Who should pay for a self-driving crash?  Bastiaan Krosse, who heads the automated driving programme at research institute TNO, said decisions on insurance need to be taken now, before the self-driving car becomes a reality. 

USAA is offering insurance for ridesharing drivers in three more US states.

Japan’s Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance have jointly developed a new insurance product to cover risks involved in demonstration tests of self-driving cars. The new policy will cover possible risks involved in demonstration tests of self-driving cars in a comprehensive manner. Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance believe the new product will encourage more companies to demonstrate their technology. Insurance premiums will differ, depending on the number of vehicles used in a demonstration test and the test period. They are expected to be between tens of thousands of yen (hundreds of dollars) and hundreds of thousands of yen per test per year. The two insurers expect to sell policies to automakers, research institutions, parts suppliers, telcos telecommunication firms and software companies. 

Daimler has established its own warranty insurer: Mercedes-Benz Versicherung AG. This move is likely an indication of how Daimler will support its driverless vehicle introductions.


Despite the addition of driver assistance features to vehicles intended to help avoid collisions, the growing number of in-vehicle distractions is resulting in greater opportunity for driver distraction.

One of the biggest pieces of news to hit the autonomous vehicle sector this last month was Volvo’s announcement that the company will accept full responsibility for any accidents caused by its driverless cars.  Mercedes and Google “have made similar claims as manufacturers race to create a full-functioning, legal car of the future”. The implications for the insurance industry are enormous.

Despite the addition of driver assistance features to vehicles intended to help avoid collisions, the growing number of in-vehicle distractions is resulting in greater opportunity for driver distraction.  A recently released study concludes that “aids”, such as Siri, distract drivers for up to 27 seconds after the interaction with the device is complete. Driving at 40 km/h, distraction of 27 seconds would cover a distance equivalent to 3 football fields.

The “misuse” by some Tesla drivers of Tesla’s autopilot (released in October via a software update) combined with the in-vehicle distractions should clearly spell danger for insurers.

KPMG released a report that concludes that autonomous vehicles could shrink US personal auto insurance by 60%. The impact would be underestimated if autonomous vehicles are defined as fully autonomous.

Munich Re has launched its Mobility Domain. It is part of the company’s enhanced focus on innovation and emerging risks. Driverless vehicle technology will be an important focus of the Mobility Domain’s activities.

Google is intensifying its investments and partnerships in the insurance technology space. The company has signed off on at least 6 separate partnerships and investments in insurance tech just this year. It looks like the Silicon Valley giant has its sights set on disrupting the multi-trillion dollar insurance business.



Insurance companies are smartly investing in businesses that are “connected”.

Intact Financial Corporation recently unveiled rudimentary details of a new deal with Uber that would see the company offer the first auto insurance in Canada tailored at protecting drivers, and by extension passengers, of the ride-sharing service. Will other insurers follow in the same path? Will the products to be offered be similar? Will Intact benefit from a first mover advantage? Will this insurance coverage result in an increase in the price of taking an Uber?

Munich Re America launched a Mobility Domain as part of the company’s overall commitment to understanding and developing innovative solutions for emerging risks, and as an engine for future growth.

Zurich has been appointed insurance associate by CityMobil2, the EU project staging the first cross-European pilots of self-driving vehicles.

Insurance companies are smartly investing in businesses that are “connected”. One such investment was made by USAA in Roost lands, supplier of leading edge next-generation technologies.

Driverless vehicles are around the bend: Is this the insurance industry’s Kodak moment?

“we expect traditional motor insurance to become niche to obsolete within two decades.”

Originally published on

Do you ever wonder why the executives at Kodak couldn’t see the threat of digital photography? After all, this was a huge, affluent corporation with access to abundant resources and intelligence. In fact, at its peak, the company employed 145,000 people and had revenues totalling $16 billion.

What you may not know is that a Kodak engineer, named Steve Sasson, invented the first digital camera. In an interview given to the New York Times, he characterized the corporate response to his invention as “that’s cute – but don’t tell anyone about it.”

It didn’t take long for digital photography to be discovered by others.

It’s not what you know, It’s what you do

In 1981, Kodak’s head of market intelligence, with support from the company’s CEO, undertook an exhaustive amount of research which assessed core technologies and forecast timelines for likely adoption. Their report accurately predicted the replacement of Kodak’s established film-based business by digital photography and accurately forecast that it would take about a decade for the new technology to take hold. The good news was that Kodak had time to plan, to diversify, to transition to other more lucrative businesses, to develop new products that would generate profits for the company. The problem was that it did not.

Fuji was an important competitor of Kodak in the film business. Recognizing the threat of digital photography, Fuji’s executives reacted differently. The company diversified more successfully. Film representing 60% of its business in 2000, contributes almost nothing to Fuji’s bottom line today.

The truth will set you free, but it might not make you happy

Fast forward to 2015 and to a different industry: insurance. The industry faces numerous challenges and threats and many of them are technology related. One of the most important threats concerns auto insurance.

For the last few years, I have been invited to speak at several insurance industry events, including the Executive Forums (by the way, they are fantastic!), about changes in mobility of people and goods and their impact on insurance. In the last three years, industry reaction to the arrival of fully self-driving vehicle technology has evolved considerably. It has progressed from “You are nuts, this technology will never work” to “OK, it will happen, but not in my lifetime” to “It will happen, but the uptake will be very limited, as motorists will refuse to give up control of the steering wheel.”

In June of this year, KPMG released the results of a survey undertaken with insurance industry professionals to assess their preparedness for autonomous vehicles. The report states:

The conversion to autonomous vehicles may bring about the most significant change to the automobile insurance industry since its inception. As the way we drive and commute transforms, the amount, types, and purchase of automobile insurance will be impacted. The disruption to insurers may be profound, and the change could happen faster than most expect.

As many others who have evaluated the impact of this technology on insurance, KPMG forecasts “a new normal” within a decade. Despite this, the study concludes that 74% of insurance companies are not prepared for the change.

Strategy means looking beyond the windshield

The insurance industry is blessed with some strong strategists who will rise to the challenge and prepare their respective organizations for the significant changes that will certainly occur. And while no one has access to a crystal ball, insurers should be forecasting significant change in auto insurance within the next five to ten years.

At the 2015 Executive Forum, Aviva Canada’s President, Sharon Ludlow, demonstrated her keen understanding of what lies ahead in motor insurance:

we expect traditional motor insurance to become niche to obsolete within two decades.”

The chart she shared with those in attendance indicated the availability of fully autonomous vehicles before 2025 but a significant uptake of the technology starting in 2025.

Hanging on to the belief that consumers will shun driverless vehicles is void of realism. Here are some facts that should be taken into consideration when evaluating potential interest in this technology:

  • The car is the single-greatest expense of most Western households (remember, unlike your car, your home is an investment that should increase in value over time).
  • Despite costing the average Canadian approximately $12-$13,000 annually to own and operate an average make/model, the vehicle remains idle 94% of the time.
  • Younger people are increasingly demonstrating an aversion to driving.
  • Our aging population, with ever increasing physical and mental limitations, is going to require to be driven.
  • Our population is becoming increasingly urbanized, preferring to avoid lengthy commutes.
  • Congestion has gotten so bad that driving is generally not pleasant. On the contrary, it’s downright frustrating.
  • People prefer to do anything but drive while they are in their vehicles. With increased connectivity, the number of distractions increases. This makes bad drivers even worse. Today, human error contributes to 93% of road collisions.
  • The uptake of new mobility options (including car sharing and ride sharing) is phenomenal. In fact, Vancouver and Calgary are the top two cities in North America in car sharing. With the recently announced expansion, Car2go’s (Division of Daimler) car sharing fleet in Vancouver is the largest one in the world.
  • Cities around the world are increasingly introducing policies to reduce the number of individually owned vehicles in their respective territories as a way to reduce the unbearable congestion and pollution. Helsinki, through its plans to introduce Mobility as a Service (MaaS) is targeting the end of personal vehicle ownership by its residents by 2020. Montreal is encouraging greater car sharing in order to minimize the number of individually owned vehicles. Jim Holland, Ford’s VP, Vehicle components and engineering, has stated that congestion will result in people not having a choice but to participate in car sharing.
  • Just about every auto manufacturer (and the supply chain) is working on the technology to automate as many of the features of the vehicle as possible.
  • Silicon Valley giants like Google and Apple have set their sights on the transportation industry and the huge profits that self-driving technology can bring to their coffers. There is an R&D spending and hiring frenzy to bring this technology to life. Why? Because this technology represents the potential to replace vehicle ownership with mobility on demand: a new business model that will generate immense revenues and profits for those who control it. This new business model means having access to a vehicle when you need one, through your smart phone, but without the headaches of driving, parking, paying for parking or other infractions, fuelling / charging the vehicle, bringing it in for maintenance, washing it, … paying insurance to use.

The changes might seem slow … Until they aren’t

Mobility on demand is expected to cost significantly less than vehicle ownership. So all the benefits, none of the headaches and all at a significantly lower cost. How many of your customers would reject that offer?

Not everyone will line up on day one but after the technology has had the opportunity to prove itself (months? a year? maybe two), the uptake curve will look like a hockey stick.

Like Kodak in 1981, the insurance industry has less than a decade to prepare for this paradigm shift that will result in approximately $20 billion of premium (in Canada alone) dwindling to a niche market in the years that follow. How will insurers prepare? How will brokerages prepare? Can all brokers start to target commercial lines business to make up for lost premium? Will this contribute to a significant consolidation in the industry? Will insurers prioritize diversification strategies?

The next few years are key to preparing the industry for the future. Complacency and beliefs that consumers will reject the mobility offers presented by the Googles and Apples of this world are clear recipes for failure.

About the Author

Catherine Kargas is Vice President at MARCON where she provides business strategy consulting advice to clients in both the private and public sectors of the economy. Catherine also serves as chair of Electric Mobility Canada, helping to promote sustainable transportation solutions. Catherine has worked closely with in developing leading edge projects and programs. She speaks frequently at insurance industry events. Catherine can be reached by email at


Switzerland’s mail service is preparing for a future of drone deliveries of packages

The “first US government-approved drone delivery has successfully transported 4.5 kg of medical supplies to a rural health clinic […] The test is being hailed as proof that drones can be useful in a delivery scenario.”

Meanwhile, drone permits are soaring as FAA develops rules for their usage. Numerous industries, including insurance, agriculture and logistics, are demonstrated an interest for the technology.

Switzerland’s mail service is preparing for a future of drone deliveries of packages.


The insurance industry’s perception of and preparation for the arrival of autonomous vehicles.

Over the last few weeks, numerous articles and blogs have been written on the insurance industry’s perception of and preparation for the arrival of autonomous vehicles.

While some insurers may be sleeping at the wheel, others are planning for the new mobility space. USAA, for example, has led the latest round of funding for Automatic Labs, a connected car technology company.

Numerous articles were focused on the recent “hacking” of a Jeep. Automakers from around the world have created the Crash Avoidance Metrics Partnership Consortium (CAMP) that has already invested 11 years researching and testing security approaches. This underlines the cyber insurance opportunity for insurers in the mobility space.  The cyber insurance market is expected to reach $10 billion by 2020. As a side note, the Canadian government announced $237 million in cybersecurity funding over the next 5 years.

Google’s intentions regarding Google Compare are unclear. While the company’s activities in the insurance space generate revenue, one can only speculate that

these activities are intended to provide insights that will eventually support Google’s driverless vehicle efforts.

According to a new poll from Forbes, almost 8 out of 10 drivers “affiliated with ridesharing companies like Uber or Lyft choose not to disclose their activities to their insurance agent or carrier”.  Could the same statistics apply in Canada?

After offering ridesharing coverage in Georgia, Virginia, Maryland and Texas earlier this year, GEICO is expanding its offering to Pennsylvania.

Munich Re and Comet have engaged in a feasibility study focused on autonomous vehicle data and market developments.

Ride-sharing insurance

Allstate has joined the growing list of US carriers offering ride-sharing insurance and GEICO announced it is bringing end-to-end ride-share insurance to Texas.

Allstate has joined the growing list of US carriers offering ride-sharing insurance. The company’s Ride for Hire policy will “cost $15 to $20 per year on average and will provide coverage for drivers who have accidents while on the way to pick up new fares. It said it can also help them deal with gaps in coverage between their own auto insurance and policies offered by the ride-hailing companies. »

GEICO announced it is bringing end-to-end ride-share insurance to Texas. The company first introduced its ridesharing product in Virginia and Maryland. The company claims its market share is growing rapidly in both these states. “GEICO offers ridesharing coverage through GEICO Commercial at a price significantly lower than taxi and commercial rates. “


Photo by: Alfredo Mendez, via Flickr  CC BY 2.0

Insurance industry preparedness

A report published this month concludes that insurers are unprepared for autonomous vehicles.

An increasing number of articles and blogs dealing with the implications of driverless vehicle technology on the insurance industry are appearing in newspapers, speciality journals, blogs, etc.

A report published this month concludes that insurers are unprepared for autonomous vehicles. “KPMG found scepticism about the potential transformation autonomous vehicles will bring in the near-term because most insurers believe the changes are 10 years away, or more.”

Despite this scepticism, it is becoming increasingly clear that the combination of new technology, new players and new risks will transform the insurance industry over the course of the next two decades.

Join Catherine Kargas and the team at the Executive Forum on August 31st in Toronto as leaders from the regulatory, political and technology spaces join insurance industry executives to assess the implications of autonomous vehicle technology on the industry.

The future of vehicles and insurance: a hot subject at the upcoming Executive forum

As vehicular technology and mobility business models evolve, numerous industries are assessing how the changes expected in the coming five to ten years will impact their operations. The insurance industry is no exception.

As vehicular technology and mobility business models evolve, numerous industries are assessing how the changes expected in the coming five to ten years will impact their operations. The insurance industry is no exception.

Over the last two years, the Executive Forum has addressed the impacts of vehicular automation and changes in mobility of people and goods. This year’s event, scheduled to take place in Toronto on August 31st 2015, will not be any different.

The Executive Forum is a high-level event dedicated to helping P&C insurance industry executives understand the likely impacts of technological change on the industry over the coming decade.

At this, the third edition of the Executive Forum, Catherine Kargas, will lead a panel of political, regulatory and automotive technology experts to explore how upcoming changes to regulations and technological improvements will impact auto insurance.

The panel will be composed of:

  • Kathryn McGarry, MPP for Cambridge, Ontario and Parliamentary Assistant
    to the Minister of Transportation
  • Bob Burrows, CEO, G4 Apps Inc., leading APMA’s Connected Vehicle Program 
  • Derek Kuhn, VP Sales, BlackBerry Technology Solutions

In preparation for this discussion, Patrick Vice, Partner at, interviewed Catherine Kargas for her views on the subject. Following is an excerpt of that

P. Vice: You have put together quite a panel on the future of vehicles and insurance.  What are some of the expertise the panelists are bringing?

C. Kargas: I believe we have brought together a group of key individuals from the political, regulatory and technology spaces.  Kathryn McGarry will be addressing the issue of autonomous and connected vehicle changes from the perspective of the Government of Ontario and the Ontario Ministry of Transportation. Derek Kuhn and Bob Burrows, two of Canada’s leaders in the space of automotive autonomy and connectivity, will discuss how the technology is evolving.

P. Vice: 10 years is a long time in the world of technology.  What do you think are the most surprising trends you see over that period?

C. Kargas: The most surprising trend for me is how quickly things are changing, how fast the technology in the automotive autonomy space is progressing.

The technological advances of the last few years combined with the rise of new business models in the mobility space have already resulted in some disruption. One need only think of Uber. Just a few years ago, no one had heard of this company. Today, Uber has a valuation approaching of $50 billion, annual gross revenues of $10 billion, more than 160,000 drivers and a presence in hundreds of cities around the world. We are seeing only the beginning of the disruption. Today, this disruption is being felt by taxi drivers and others competing for a share of the urban mobility pie.

A number of trends are combining to create the perfect storm in the mobility space. These trends include increasing urbanization, growing congestion and pollution levels as well as an aging population and a relative disinterest in driving demonstrated by younger adults. Combine these trends with a high cost of ownership and operation of a personal vehicle that is utilized only 4% of the time and you have an ecosystem that is ripe for change.

P. Vice: You work with insurers and brokers.  How ready are they for some of the changes you see coming?

C. Kargas: We brought up changes in mobility and their implications for insurance at the 2013 Executive Forum. The attendees were essentially in two camps: those who thought I was talking about a science fiction experiment and those who believed that change would happen after they retired.  At the 2014 Forum, we had no naysayers but the conversation was limited because the insurance community had not quite understood the implications of this technology.

Many of the Canadian insurance executives that I have been in contact with understand that the technology is evolving and that complete vehicular autonomy is a reality they will need to face. However, few in the industry have their heads wrapped around how they need to prepare for the upcoming changes. This is understandable given the number of unknowns.

In fact, many insurers have not yet determined how they will adapt to the changes that are already part of the mobility offering, including ride sharing and the various forms of car sharing. Unlike several US carriers that are offering ride-sharing insurance, to my knowledge, no Canadian carrier is currently offering such a product.

P. Vice: Last year, Don Light from Celent showed a roadmap to the end of automobile insurance.  Are there any good news scenarios that could balance that?

C. Kargas: There have been many doomsday predictions concerning auto insurance. I believe that insurance in the mobility space will change dramatically but there will continue to be opportunities for insurers that understand the changes and are prepared to evolve to remain relevant.

Assuming fully autonomous technology is commercially available within the coming decade and the regulations enabling their full operation are in place, it will take time before the millions of vehicles on Canadian roads are replaced. During this “hybrid” period, motorists will continue to require insurance. As more autonomous features are introduced, the vehicle will be doing more and more of the driving. This period will be a challenging one. Despite the fact that auto manufacturers will be positioning these features as driver “assist” and insisting that drivers remain vigilant even while the vehicle is assuming the driving function, the growing number of in-vehicle distractions will generally result in motorists paying little attention. This may result in an increased number of collisions. Further, the fact that motorists will be undertaking less of the driving will result in motorists’ skills erosion. Consequently, I suspect that the transfers between human and machine will not go as smoothly as some in the auto industry may hope. Auto insurance policies for semi or highly autonomous vehicles will likely involve two rates: one for kilometers driven by the motorist and a lower rate for kilometers driven by the vehicle itself.

Moreover, despite the fact that the objective of using fully driverless vehicles is to significantly reduce the number of collisions resulting in over 1.2 million deaths annually, collisions will continue to take place. No manufacturer or technology provider can guarantee the end of collisions.

As we move into the shared, driverless mobility ecosystem, new risks will emerge and these risks will present opportunities for insurance companies that are informed, involved and willing to adapt.