Tag Archives: driverless cars

7 ‘Laws of Zero’ Will Shape Future

This article was written by Chunka Mui for the International Insurance Society, a sister organization of Insurance Thought Leadership, under the umbrella of The Institutes. To see more IIS articles by Chunka and other IIS experts, visit internationalinsurance.org.

“There are decades where nothing happens, and there are weeks where decades happen,” Vladimir Lenin observed. The arduous weeks spent grappling with the COVID-19 pandemic certainly fall into the weeks-where-decades-happen category.

Take telehealth; its adoption has seemingly been on the horizon for decades and suddenly, within weeks after COVID-19 became a pandemic, telehealth achieved near universal embrace. McKinsey estimated that healthcare providers saw 50 to 175 times more patients via telehealth in the months after the pandemic than ever before. Additionally, 57% of providers viewed telehealth more favorably than before the pandemic, and 64% of providers reported that they felt more comfortable using telehealth. Now, even as the pandemic recedes, another McKinsey survey found that 40% of consumers believe they will continue to use telehealth at similar or greater levels even after the pandemic ends. These punctuated changes in preference, perception and practice will force the rewiring of the entire healthcare delivery system.

Similarly, insurance has steadily, but unevenly, digitized for decades. Suddenly (and admirably), within weeks after COVID-19, the digital nature of most insurers’ work, collaboration, transactions and customer service greatly accelerated. A recent PwC survey found that customers are not suffering laggards lightly. Of customers who expressed difficulties in dealing with their carriers, 41% said they are likely to switch providers due to inadequate digital capabilities.

A key aspect of successful innovation in the context of such rapid change is to first deeply understand the technological drivers behind that change. I briefly introduced these drivers as the Laws of Zero in my first article of this series, titled “How Insurers Can Change the World.” In this article, I explore these laws to highlight the changing future context in which insurers must operate. (I go into even more detail in a book I’ve written with ITL Editor-in-Chief Paul Carroll and a longtime colleague of ours, Tim Andrews, a vice president at Booz Allen Hamilton, that will be released Sept. 21.)

The basic ideas behind the Laws of Zero are that seven key drivers of change—computing, communications, information, genomics, energy, water and transportation—are improving exponentially in capability while headed toward a nearly zero relative cost. This yields two critical implications. First, as shown in the figure below, there exists a rapidly expanding gap between state-of-the-art technology potential and incremental change. Secondly, the rapidly decreasing costs of those state-of-the-art capabilities will drive marketplace adoption; the notion of zero(ish) cost grabs the attention of loads of people and means we use as much of these capabilities as we need to address any problem. 

Figure 1: The Rapidly Expanding Technology Gap

Successful innovation requires anticipating future scenarios, both upside and downside, enabled by the Laws of Zero, and then smartly pulling backwards to the present to chart possible paths for working toward the opportunities while managing downside risks. The best way to predict the future is to invent it, as personal computer pioneer Alan Kay says.

Now, let’s explore the drivers and lay the foundation for understanding the upside and downside scenarios that should drive your innovation agenda. 

1. Computing

The smartphone in your pocket has over 120 million times more processing power than the computer systems that guided Apollo 11 to the moon and back—at a percentage of their cost that effectively rounds to zero. While computing power obviously isn’t free (as anyone buying a smartphone knows), that power looks almost free from any historical distance.

Now, consider how computing capabilities will change over the next several decades. If Moore’s Law remains an accurate guide, computing power will double 20 times in the next 30 years while cost would be cut in half 20 times. In other words, we can look forward to analytical power more than one million times faster than the present with a per-unit cost of today’s divided by one million. What’s more, trillions of devices will be connected in a network, making the so-called Internet of Things millions of times more important than it already is.

Building on ever-smaller connected devices, over the next several years AI-driven voice input assistants such as Alexa, Google Home and Siri will not only take commands but will act as sensors that can detect illness, provide home security, etc. Robots will extend our presence: Just slap on some virtual reality goggles and (with permission) “inhabit” a robot in your kid’s, parent’s or friend’s room. Computing could be implanted in our bodies. A chip right below the jaw and near the ear could capture our voices while vibrating in ways that our ears would easily pick up as sound. There is even talk of chip implants that would plug directly into our brains and give us instant access to essentially all the world’s information. People may turn into a form of centaur, except that, instead of being half-human and half-horse, we would be part people, part electronics.

People, homes, cars and all other things being insured and served will never be the same, and the insurers that serve these assets must adapt.

2. Communications

Communications will reach into every corner of the globe, as tens-of-billions of devices and trillions of sensors are incorporated into a tapestry of communication. In other words, we aren’t just talking about humans connecting with each other. We’re also talking about humans talking to devices as well as devices talking to each other. This communication could happen anywhere because, with a little solar power and a tiny antenna, every device could be connected.

Communication will become richer too, as having bandwidth to burn means that video can be part of every connection. Think of how easily the world moved from voice calls to Zoom calls during the pandemic. Now imagine having thousands of times as much bandwidth available. If you draw the graph of cost vs. performance from today’s perspective, that cost will be so low that universal-ultra-high bandwidth connectivity will be the normal expectation rather than an exception.

Imagine what that will mean for every aspect of the insurance value chain, including underwriting, distribution, claims and service.

3.  Information

The ability to embed computing and communications into every aspect of life will exponentially expand the amount of information available. Paired with rapidly improving data analytics, machine learning and other artificial intelligence capabilities, information will enable more powerful knowledge-driven enterprises.

Think about a situation we’re all familiar with, the daily commute. Every car and street will soon be so thoroughly wired that traffic will be managed in ways that aren’t conceivable today. For example, just because you can’t see what might be coming at you from the sides at an intersection, doesn’t mean another car can’t see for you and relay that information to your car; a camera mounted on a car, for instance, could spot a vehicle zooming through a red light and automatically alert all cars in the vicinity to halt and wait for the danger to clear the intersection. The presence of ice or any other danger will be immediately communicated to all cars in the area. Traffic will be managed as a single, highly efficient digital system, rather than through a few rules that require hundreds of millions of drivers to sort things out on their own.

Ubiquitous sensors will supply information from everywhere else, too – – including our bodies. Already, sensors built into contact lenses can measure blood sugar levels. A cuff about the size of a smartwatch can report on blood pressure in real time. Tiny cameras can now be sealed into a capsule the size of a cod liver oil tablet that someone can swallow; these cameras screen for cancer as they pass through the person’s bowel, meaning the person can avoid the dreaded colonoscopy. In addition, chips the size of a grain of salt are being developed that could be swallowed and provide real-time data on our vital signs from inside our bloodstreams – – sort of an Internet of Me to go along with the Internet of Things.

Yes, this sort of transparency could be a scary prospect, and the concept of Big Brother is a real possibility. Breaches in cyber security will be an ever-present threat. How do insurers shape their futures in a world where every bit of information is available? How do these insurers offer trustworthy products and service while navigating potential problems?

4.  Genomics

If DNA is “the language in which God created life,” as President Bill Clinton once put it, then genomics’ acceleration has brought us to the point where we can read and write in the language of life. It cost billions of research dollars to sequence the first human genome in 2003. Today, sequencing a genome costs roughly $600. That’s a cost improvement of more than one million times. That’s almost seven orders of magnitude in just 18 years, and the gains are hardly finished. There are already attachments that let you sequence a genome from an app on your own smartphone. Likewise, rapid improvements are being made in the field of gene editing, building on revolutionary techniques such as CRISPR/Cas9 (called CRISPR for short) and mRNA.

In medicine, as genomics pioneer Craig Venter has observed, almost every new drug and vaccine is already based on genomics, and, even at our early stage of knowledge, genomics provides hope for addressing several diseases caused by variation in a single gene. These diseases, known as monogenic disorders, include sickle cell anemia, cystic fibrosis, Huntington’s disease and Duchenne muscular dystrophy – debilitating diseases that afflict some 400,000 people in the U.S. CRISPR is helping researchers better understand these diseases, and a number of therapies are in clinical trials for treating and even curing them.

The combination of massive power and plunging costs guarantees that we will soon be able to sequence any genome, anytime, anywhere, with profound implications not just for medicine but far beyond. Genomics is a foundational tool in almost every field of science related to biology, including agriculture, environmental studies, health and zoology. Genomics will exponentially amplify science and engineering’s impact over the next half century to a degree that will likely surpass the impact of the computing platform it is built upon.

We still have much to learn to become truly fluent in the language of life. But it is not hard to envision harnessing the power of genomics to create healthier foods; to eliminate microbes that cause disease; to eradicate the most dangerous pests; to identify and possibly correct the genetic markers that cause disease; and to do all of the former in an ethical and equitable manner with a deep understanding of the implications of our choices.

The opportunities and challenges for life and health insurance will be profound.

5.  Energy

When Bell Labs developed the first solar photovoltaic panel in 1954, the cost was $1,000 per watt produced. That meant it cost $75,000 to power a single reading lamp, which is a little pricey. By 2017, solar was down to $0.25 a watt. A solar project that will supply 7% of the electricity to Los Angeles promises power at less than $0.02 per kilowatt hour (kwh), while the national average for electricity charges to consumers in the U.S. is nearly seven times that. The International Energy Agency’s annual report for 2020 says solar power is already “the cheapest electricity in history.” A drop in price by a factor of 3,000 over six decades isn’t Moore’s law, but it’s certainly headed toward that magic number: zero.

Wind power is also on an aggressive move toward zero as prices are down nearly 50% in the past year. Contracts were recently signed for wind power in Brazil at a cost of 1.75 cents per kilowatt hour, about one-fourth the average of 6.8 cents per kwh worldwide for coal, considered to be the cheapest of the conventional energy sources. 

The key holdup for renewable energy has been batteries. There must be some way to store the solar and wind energy for when you need it, which means the need for lots of battery capacity. Fortunately, batteries are progressing on three key fronts: battery life, power and cost. CATL, the world’s top battery producer, recently announced a car battery that can operate for 1.2 million miles, eight times longer than most car batteries on the market today. Additionally, battery prices have plunged 87% in the past 10 years.

So, we have at least three cost curves that look like they’re headed toward zero: solar, wind, and batteries. That’s plenty, but others are worth mentioning as well, including nuclear fissionnuclear fusiongeothermal and radical energy efficiency. Together, these curves create a Law of Zero for clean energy that will create unfathomable benefits.

Energy drives every living thing, and unlimited clean energy will drive unlimited opportunities. 

6.  Water

quarter of humanity faces looming water crises, and demand is growing along with population, urbanization and wealth and the taxing of traditional fresh water supplies while also polluting them. But there’s hope – limitless energy could allow for the almost magical availability of water. 

By 2050, anyone near a body of saltwater could benefit from water technology breakthroughs. Desalination has always been possible, but prohibitively expensive because of energy costs, whether done by filtering out the salt through osmosis or by evaporating the water and leaving the salt behind. Cheap energy makes desalination more plausible, as many cities around the world are getting desperate for water.

Water won’t be pulled out of thin air in great quantities anytime soon, but that technology is also under development. One group won a $1.5 million X Prize by developing a generator that can be used in any climate to extract at least 2,000 liters of water a day from the air at a cost of less than $0.02 per liter, using entirely renewable energy. One can imagine a day when decentralized production of water will lead to benefits akin to those that come from having abundant electricity while off the grid.

Where there is abundant water, along with the energy that comes from the Law of Zero, there can be food. The basics of life will be available everywhere, even at the far corners of the Earth.

7.  Transportation

Although the enthusiasm for autonomous vehicles (AVs) took a hit for a couple of years – they are a really hard problem – momentum is building again, and the multitude of startups and brilliant scientists tackling the issues portends a future that will include an unlimited number of AVs.

The implications are mind-boggling. AVs are aimed at dramatically improving two key drawbacks of human-driven cars. First, humans are bad drivers. More than 90% of vehicular accidents are due to human error, which result in tens of thousands of deaths, millions of injuries and hundreds of billions in cost each year—just in the U.S. Worldwide, the figures are even more staggering. Bad driving also leads to traffic congestion, costing hundreds of billions of dollars due to added hours in traffic, wasted gasoline and lost productivity. Secondly, human-driven cars are very underused. Most of these cars are personally owned and sit parked more than 95% of the time. Some estimate that AVs, once successfully deployed as fleets of shared Uber-like, on-demand vehicles, could reduce accidents, lower congestion and reduce the number of cars by 90%.

Now, a lot of metal will need to be shaped and maintained even in an autonomous future, so transportation won’t be free. But that transportation will be so much less expensive than it is today that we can be profligate in throwing transportation resources at anything we want to. Think in terms of a world where fuel is free and, thus, infinite, where many considerations of time and distance no longer matter. Think about how health, wealth, education, economic mobility and more could all improve because access to transportation currently constrains so many people.

Yes, lots of people and businesses will have to adapt. Among the notable are the 4.5 million professional drivers in the U.S. AVs will also change emergency rooms, which currently treat some 2.5 million people each year after auto accidents and, based on current estimates, might treat only 10% as many individuals once AVs become ubiquitous. Car dealers, gas stations, oil companies, auto repair shops and most others in the multitrillion-dollar transportation value chain might well be disrupted.

There’s also the existential question for auto insurers: Why do you need personal auto insurance when there are almost no accidents, and you aren’t driving anyway? Will personal car insurance essentially go away?

* * *

Not all the Laws of Zero will kick in right away. The ubiquity of water, in particular, will take time to play out, partly because getting to zero cost for energy will also take time. Other laws, such as for information and genomics, are driving disruption faster than most imagine.

Here’s the core question all insurers should explore: How will these Laws of Zero shape the future? As customers, supply chain partners, competitors and others in the world at large accelerate their own digitization, driven by the Laws of Zero, how will insurers innovatively adapt their own business and operating models to stay responsive and competitive? Insurers should assume that decades will continue to happen in the weeks and months ahead.

These are times that demand both giant leaps and baby steps. In coming articles and webinars, we will continue to explore how insurers can systematically do both. In the meantime, we welcome your comments and questions. Read more at internationalinsurance.org.

A Changing Vision for Driverless Vehicles

As plans for fully autonomous vehicles continue to get pushed back, the near future is beginning to look like it will revolve around a different acronym: more ADAS, less AV.

Autonomous vehicles, or AVs, will provide many of the technology breakthroughs that allow for advances in ADAS, or advanced driver-assistance systems, which will use a host of new sensors and AI to reduce accidents. But the vision of driverless robotaxis carrying us everywhere and making deliveries looks like it will have to wait a bit, except in carefully circumscribed areas — and maybe even there for a while yet.

The shift to ADAS from full AVs should soften the near-term effects on auto insurers, which have feared a loss of business in a world where individuals aren’t responsible for driving. At the same time, the shift may increase the cost of repairing expensive electronics when accidents occur.

The new focus on ADAS is by no means a statement that the full AV revolution won’t happen. The progress by AVs has been nothing short of astounding since DARPA, a research arm of the Department of Defense, offered a $1 million prize in 2004 in a contest among autonomous vehicles on a 150-mile course in the Mojave Desert. Most of the 15 vehicles chosen to participate were basically golf carts with sensors and computers strapped on to them, and more than half didn’t even make it out of sight of the starting line. The farthest any vehicle went was 7.4 miles. Just 17 years later, we have fleets of sleek-looking vehicles traveling city streets using AI and sensors — albeit still with a safety driver behind the wheel in just about all of them.

Progress will continue, too. A Brookings Institution study found that $80 billion flowed into AV technology investments between 2014 and 2017. That’s just the investments announced publicly and, of course, doesn’t count the prior investments or the money that has flooded into the field since 2017.

The issue hasn’t been that the AV technology doesn’t work — in any given situation, an AV will perform better than the vast majority of human drivers. It’s just that the world around AVs has turned out to be more complex than initial plans allowed for. In particular, we humans do lots of unpredictable things as pedestrians and as drivers — and AVs aren’t allowed to make mistakes.

While we wait for full autonomy, though, plenty of opportunities have opened up to make driving safer, a notion underscored by some recent multibillion-dollar price tags on acquisitions of ADAS companies.

Lidar sensors, governed by always-learning AI, can enhance automatic braking systems — and studies have found that cars are already more than 50% less likely to have a rear-end collision if equipped with such a system. Systems that keep cars centered in lanes will also improve as technology designed for full autonomy is deployed.

Increased communications capabilities designed for AVs will allow for better connections with roads and other infrastructure. When I rented a car last week while on vacation at the Jersey shore, I wasn’t sure what the speed limit was at one point, then realized that it was displayed on my dashboard based on some sort of radio signal from a speed limit sign I’d missed. Cars will also be able to better communicate with each other. If a car slams on its brakes, it will be able to alert the stream of cars behind it so they can instantaneously begin braking, too. Further out, AV technology will even let cars communicate with each other in ways that let them essentially see around corners — even if you can’t see that a car is speeding through a red light and might broadside you, many other cars on the road can, and they’ll be able to alert yours to brake and avoid the danger.

Technology developed for autonomous cars may also find earlier uses in autonomous trucks. Many are looking at having them operate in fully driverless mode on freeways, where vehicle traffic is far more predictable than on city roads and where pedestrians aren’t an issue. Human drivers would be staged at freeway exits, to ferry trucks to and from their final destinations and within cities. Makers of self-driving trucks say they can cut freight costs in half by removing the need for drivers on the freeway portion of long-haul routes.

I remain as optimistic as ever about the outlook for AVs. Since Chunka Mui and I wrote a book on driverless cars in 2013, progress was faster than we expected for a time and now is somewhat slower. As often happens with fundamental innovations like AVs, the development isn’t happening in a straight line. We’re winding up with hybrid forms of the technology in both cars and trucks before we get to the full effects. But we’ll get there.



Who Is Liable When a Driverless Car Crashes?

Now that truly autonomous vehicles (AVs) are starting to appear on roads, the insurance industry will be called on to perform its usual role as an enabler of innovation: Insurers will quantify the risks and likely cover much of it.

But how should insurers think about the liability for AVs? Will legislatures specify who is responsible for which problems? Will regulators? Will the courts? What principles will guide the decision makers? Where will liability fall?

Using history as a guide, it’s possible to make reasonable guesses at some of the answers.

An interesting analysis in Fortune argues that the courts will set the rules, applying long-standing principles to try to sort through the issues in the new environment.

The process will thus be messy, and some of the arguments made in court will initially be idiosyncratic. The article notes that, in the 1930s and 1940s, people who were hit by hired taxis sometimes sued the passengers rather than the driver or the driver’s employer. That approach never got traction in the courts and seems silly today, but you can be sure that some similarly odd-sounding theories will be tried in AV cases before being discarded.

The article argues that clear principles will gradually emerge. One is obvious: that the manufacturer will be responsible for a clear error, the software equivalent of having a tire fall off a car. But the two other standards were more subtle:

–A court will ask whether the AV performed better than a competent, average driver. That question may not apply just to the circumstances of the accident and the specific system or component that may have been involved in causing a collision but may also be a general question about the performance of the AV versus a human driver. The U.S. National Highway Traffic Safety Administration made that sort of general assessment of safety when it cleared Tesla’s Autopilot system of responsibility for a fatal crash in 2016. The temptation, of course, will be to compare an AV with a perfect driver — aren’t computers supposed to be free of error? Instead, the NHTSA is taking the position that anything that raises the average competence is a societal good. And a comparison to an average driver would be good news for the manufacturers of AVs and for those that insure them.

–The court will also ask whether an AV performed better than an AV did previously in a similar situation. A key promise of AVs is that they are always learning, and not just from an individual car’s experience but from what has happened to every car in the fleet. So, courts will hold manufacturers responsible for not making the same mistake twice.

The potential revenue for insurers from AVs is enormous. A recent report from Accenture and the Stevens Institute of Technology estimates that, even as AVs slash premium for personal auto coverage, product liability will be one of three new revenue streams that will generate $81 billion in premium between now and 2025. (The other two opportunities are in the new cyber risks that come along with AVs and in the potential liabilities associated with the infrastructure that will support AVs.)

The law will take shape slowly. It always does. There will be surprises along the way. There always are. But the size of the product liability opportunity, plus the beginnings of answers on legal principles, suggests that insurers should start working now to be prepared as the opportunity unfolds.

Stay safe.


P.S. Here are the six articles I’d like to highlight from the past week:

OnStar: Next Step for OEM Partnerships

Insurers hope to create a new way to collect driving data that’s easier for the driver than installing a device or downloading an app.

COVID-19 Is No Black Swan

There were clear warnings about COVID from credible institutions. The real issue is how we are going to deal with “grey rhinos.”

ESG: Doing Well by Doing Good

Insurance is at the forefront of the environmental, social and governance movement, which may usher in a Second Age of Enlightenment.

P&C Claims: 4 Themes for the Future

The extraordinary events of 2020 have accelerated four themes: automating operations; AI for insight; augmenting experts; and new ecosystems.

Advice to Early-Stage Startups on Pricing

Your pricing is a marketing tool that announces how you want potential clients to think of your offering.

How AI Transforms Risk Engineering

“AI could contribute to the global economy by 2030, more than the current output of China and India combined.”

What a Safer World Means for Brokers

On Nov. 20, 2018, Insurance Journal reported an article suggesting auto insurance premiums will decrease by $25 billion by 2025. To put that in perspective, that is approximately 5% of all U.S. P&C premiums. Think you’ve seen a soft market before? Just wait.

The article continued to state that new coverage lines will more than make up the difference, according to the report author, Accenture. It proposed that businesses in particular will buy $81 billion more in other lines. This means woe for the personal lines carriers and agents who have achieved far more personal lines premium growth in the last 10 years than commercial (an average annual rate increase of approximately 3.3% vs. -.1%, 2005-2017, inclusive).

The authors argue that driverless cars will make the roads safer but increase the need for product liability. I am not sure about this because it has been reported that some manufacturers are planning to forego product liability insurance on their driverless cars. Maybe they had a change of mind or the authors are providing insights missing from press releases the Securities and Exchange Commission might want to review. Or maybe the manufacturers’ contracts will place all liability on their vendors or others (like the owners who do not read their software agreements).

The authors suggest consumers, companies and governments will quickly buy much more cyber coverage. They probably do need to quickly buy more, but, with as many as 3,000 cyber forms floating around in the U.S. alone (according to a recent Rand Corp. study), what cyber is actually being purchased? The Rand study is important to understanding future cyber purchases because, as it suggests, some of the forms may not be intended to pay claims, some companies’ actuarial models may be shots in the dark and clearly some companies’ forms indicate they really do not know what they are doing (at least this is my impression of Rand Corp.’s conclusion). These are big issues that put into doubt what the cyber insurance market really even is, and what happens with the inevitable shakeout? If some companies do not really know what they are insuring (reading some companies’ forms suggest they really do not know what they are insuring) and are taking shots in the dark on pricing (and reserving maybe?), there may be a problem of stronger and smarter companies not achieving adequate market share until the shakeout occurs.

See also: Cybersecurity for the Insurance Industry  

Add to this confusion the fact that explaining cyber insurance, and explaining exactly what the different cyber forms are insuring, is very difficult. Agents need to try doing this to understand that increased cyber sales are not magically going to happen. Beware the agent who pretends that all cyber forms are the same or that, just because an insured has purchased a cyber policy, they now have “cyber” coverage. The insured may think it has much broader coverage than the carrier interprets (which will be interesting for those companies less sure of what they are even insuring; see the Mondelez v. Zurich suit for a great example). Also, after asking dozens and dozens of agents what they are even insuring when they sell a cyber policy, I’m often met with blank stares or statements that they do not understand cyber so they don’t sell cyber.

Product liability sales may increase. Product liability has been one of the most volatile major lines of P&C insurance over the last 20-plus years, so any prediction specific to this line seems problematic. Since 1996, NPW specific to product liability per A.M. Best (author’s calculation) has only increased 35%. Private passenger auto has increased 106%. In the last 10 years, NPW has actually declined 11%. I am not suggesting these results are rational, because the combined ratio for product liability is an abysmal 129% over the last 10 years. Its worst combined ratio was 159% in 2011, and its best was 84% in 2006. The volatility is absurd and does not really correlate well with NPW growth. This combination of volatility and lack of charging more premium for really horrible combined ratios makes predicting this line’s future problematic.

I hope experts’ predictions are correct regarding other lines taking up the slack. Even if correct, though, personal lines agents and personal lines carriers are going to suffer if they do not begin writing commercial. Small commercial will be hurt, too, because small commercial will lose the auto, clients seem reluctant to buy quality cyber coverage and they do not usually need product liability.

The winners, if the study’s authors’ predictions are correct, will be carriers and agents/brokers writing large, complex commercial accounts.

If the authors are wrong about companies and consumers purchasing a lot more insurance but of a different line, then the entire industry suffers mightily.

Another article in the same edition published a report from Minnesota’s Department of Labor that the state’s workplace injury and illness rate decreased in 2017 to its lowest rate since the state first began measuring it. I suspect Minnesota’s results are similar to other states. The significant advances in safety and the reduced need for employees to work in more dangerous environments relative to total employment support the probability that workplaces should be safer than ever, even in a booming economy. The workplace will become even safer, with more modular construction, better safety devices and monitoring and continuing emphasis on safety. A safer environment means less rate in this line, too.

See also: Leveraging AI in Commercial Insurance  

Maybe the industry needs to offer more law school scholarships to future plaintiff attorneys to take up the slack. Otherwise, most signs point strongly to the devaluation of insurance. Insurance is more important in a risky world than a safer world.

Maybe insurance companies will get desperate and begin insuring previously unthinkable, uninsurable perils and fill the gap that way. Whatever happens, though, insurance sales are going to change significantly. The industry is at an inflection point for carriers and distributors both. This is not a point of despair, but it is a time that requires true strategic thinking and planning to identify the opportunities that exist and to plan for those opportunities, without getting too far ahead and losing what one already has. This is hard work. It requires quite a balance, which is why dedicated strategic planning is truly required.

You can find the article originally published here.

Rapid Evolution of Autonomous Vehicles

The 2008 animated Pixar movie “Wall-E” follows the refuse-based adventures of a sentient, autonomous trash compactor whose primary function was to clean an abandoned city on a now-deserted planet Earth, long ago having been abandoned by humanity. The movie highlights some of the issues that would likely occur from human beings’ over-reliance on an automated lifestyle – issues such as waste management, obesity and human environmental impact, to name a few. “Wall-E” is set hundreds of years in the future, but some of those issues ostensibly exist in the world we inhabit today.

The transportation sector around the globe is a multitrillion-dollar industry. There’s money and mistakes to be made. While we are probably a ways off from sentient automobiles, the age of vehicle autonomy is well upon us. Every week, another company releases some update, patch or application that nudges autonomous tech in a new direction.

There have been some setbacks – name me a sector that doesn’t have any – but cars that are less reliant on humans are here to stay. This is almost universally viewed as positive, with many examples given to support this position, such as:

  • Fewer accidents.
  • A move away from owned to rented vehicles, lessening the need for parking garages.
  • A productivity increase during commuting time.
  • A reduction in traffic congestion.

There are many more, but the age of connectivity comes with risks. One must exercise caution with any kind of new technology. What happens when things go wrong? Computers malfunction sometimes; we’re all familiar with Windows’ blue screen of death.

See also: Autonomous Vehicles: ‘The Trolley Problem’  

You are turning over your most precious commodity – your family – to a computer. And if that computer fails when you are trusting it not to – let’s say when it is in full autonomous mode – how will that fail affect things? In what manner will it fail? It will likely fail however the lowest-bidding subcontractor designed it to fail.

Even if it does not fail, a computer still needs to be told what to do, at least initially. Computers can learn things and eventually make better iterative decisions based on this learning, but what do you tell a computer it should do when faced with a myriad of input data?

Autonomous vehicles (ones that fly) have been around a long time. Most commercial airliners are autonomously piloted more than 90% of the time. Aircraft, along with the routes they take, are heavily regulated. They essentially all report in to the same system around the world. There is a reason all pilots around the world must communicate in English. There has to be one universal language to avoid miscommunication and errors.

Autonomous automobiles have none of that. There is no central control, no clearing house and no standardization, to the extent that even the levels of autonomy differ by manufacturer. They can, though, roughly be classified in the following manner:

Level 0 — Nothing

The baseline since Gottlieb Daimler traded horse power for horsepower. Level zero applies to all vehicles that rely solely on humans to dictate driving actions. That is my car, and almost every car that has come before it. At best it has cruise control, but it is the “dumb” version that will crash you into a wall if you let it. Example: my 2009 Honda Ridgeline truck.

Level 1 — Driver Assistance

What does this level offer us? Some automation, but not much. For level one, you are looking at adaptive cruise control or lane departure tech to come as standard on your vehicle. While the human driver still supervises everything, the vehicle is capable of some decisions on its own. Example: your eco-friendly neighbor’s 2016 Toyota Prius.

Level 2 — Partial Automation

We get a step up from driver assistance in level two. This combines multiple automated functions such as lane assist, automatic braking and adaptive cruise control to ensure they work in a smooth, coordinated fashion. Anticipating traffic signal changes, lane changes and scanning for hazards are still the domain of the driver. Example: the Audi your boss drives that has Traffic Jam Assist as standard.

Level 3 — Conditional Automation

A car running level three automation can take full control of the vehicle during certain parts of a journey under certain conditions and within certain parameters. The vehicle will, however, turn control back over to the human driver when it encounters a situation it cannot handle or when it cannot interpret input data. The onus is, therefore, on the driver to stay alert because the vehicle may prompt the driver to intervene at any moment. The incident in Tempe, AZ, in March 2018, involving a pedestrian fatality involved a vehicle running level three autonomy. Example: Tesla’s Autopilot.

Level 4 — High Automation

An auto at level four automation does not require a human to ride along during certain journeys, subject to geographic and road-type limitations. These are currently being tested, and we should see them within the next 18 months. Think Amazon last mile and pizza delivery vehicles. Example: Johnny Cab, from the original “Total Recall.”

Level 5 — Full Automation

At level five, absent inputting the destination, which will probably be done via your phone beforehand, there is no driver involvement. You will enter the vehicle, turn on your movie or laptop and that is it until you reach your destination. Example: KITT from “Knight Rider.”

Level 6 — Beyond Full Automation

Well, there is no level six – at least yet. What would level six look like if it did exist? A teleporter? Something that transports you from your bedroom, via the bathroom and kitchen, straight to the office? A flying car? We have returned to Wall-E territory. Example: The Jetsons’ Aerocar.

Technology in vehicles is designed to assist us and make us safer. For good reason, a few of the car and tech companies working on autonomous driving have said they do not want to release anything below level four. Either force people to drive, or let the machine do all of the work. Partial implementation runs the risk of scaring people away from the technology. The more reliant you are on tech, the tougher it is when you do not have it. When, in an instant, the computer turns full control back to you because its inputs are confusing, are you ready?

See also: Autonomous Vehicles: Truly Imminent?  

What does the future look like? We should expect a reduction in the frequency of accidents, but, given the complicated nature of what is now hidden under a fender, accidents will likely cost more (increased severity).

Software updates can be problematic. They do not work well on airplanes, for example. You would not release beta software for an airliner. A recent over-the-air software update by Tesla reportedly disabled the autopilot system. Too much automation in the cockpit or car, and things can go bad when the computer gets an input it does not understand.

Walt Disney promised us self-driving cars back in 1958. They are here – somewhat – but 60 years is a long time to wait in line. As a juxtaposition to that, with robotaxis already hitting our roads, the future has arrived more quickly than most people anticipated.