The way that people and goods move around in the future will be very different from what we are used to today. In fact, a number of technologies and demographic/sociological factors are going to converge to create a new era of mobility. Electric vehicles, shared mobility, autonomous vehicles, smart cities and others are big factors and the topics of much discussion at CES2018. Insights from four sessions at CES on the future of mobility can help to provide us with some perspectives on different aspects of this future:
- BYTON unveiling: A new car company and its initial plans and prototypes had their world premiere at a press conference at CES2018. The vision incorporates a variety of technologies and features that would position the car for the future world of mobility. In addition to being an electric vehicle with autonomous level 3 capability planned for a 2019 launch, the vehicle is envisioned as a smartphone on wheels (autonomous level 4 is planned for 2020). One aspect of completely “rethinking the car” is the radical user of interface enhancements. The dashboard is a 49” wide screen that can be controlled via voice (Alexa is embedded) or hand gestures. Facial recognition is used to identify the driver(s) and automatically personalize the vehicle for their settings. This feature also will be valuable in a shared mobility world where there may be several different drivers.
- Ford Keynote: CEO Jim Hackett shared a vision of smart cities and Ford’s plans for building and promoting a cloud-based, open transportation system. In Ford’s view, a total redesign of the transport system is in order. To its credit, Ford’s vision is about reconnecting people to their neighborhoods and each other, not just selling cars.
- Self-Driving Panel Session: A panel discussion with Allstate CEO Tom Wilson, Michigan Gov. Rick Snyder and senior executives from Nissan and Baidu explored the future of personal transportation. Three benefits of autonomous vehicles were articulated by Gov. Snyder: 1) improved safety, 2) increased access to mobility and 3) improved efficiency of the infrastructure. Tom Wilson added that “improving the efficiency of the transportation infrastructure is the biggest economic opportunity in America today.” The consensus of the group was that, as a society, we need to plan for this autonomous future by rethinking the infrastructure (build for the future), while placing a major emphasis on how to address the mixed vehicle environment that will exist for a long time. It is especially vital to plan for the next three to five years and provide tools to assist in safe driving.
- Driverless Car Liability Session: A session led by AIG on liability in a driverless world raises a critical question for insurers: Who will be liable when the inevitable accidents DO occur with autonomous vehicles? The vehicle owner, auto manufacturer, AI software company, telecommunications company, parts maker, government or others in the ecosystem? One perspective, shared by Lex Baugh, CEO of AIG North America’s General Insurance business, is how the risk will shift over time. He envisions three ways that it will occur: 1) risk will be mitigated, 2) risk will move from one party to another and 3) risk will aggregate differently. So, accidents may decrease, but when they do occur they could be bigger, and the question of who is liable will be more complex. No one has the answer on how this will play out, but it will require collaboration among all parties in the ecosystem as the future world of mobility evolves.
What will all this mean for insurers? The conventional wisdom is that accidents will decrease dramatically over time, because 94% are caused by human error. If that were the end of the story, it would be a formula for vehicle insurance to become obsolete. On the other hand, new and perhaps unforeseen risks are likely to emerge, including significantly increased cyber-exposures and the potential for mega-accidents.
Another consideration is that as mobility becomes easier and safer, vehicle usage and mileage may actually increase. Seniors and the disabled may have more access to transportation, allowing them to travel more. People, in general, may make more trips. In a shared mobility world, vehicle ownership is likely to decline. That possibility, combined with increasing autonomy, raises questions of which entities will need to be insured for transportation.
And, as debated in the session led by AIG, the questions of liability loom large. It may be a decade or two before there is a tipping point regarding autonomous vehicles on the road. But the opportunities and challenges that have surfaced at CES2018 will be the subject of important discussions, policies and strategies for insurers, governments, automakers and others in the near (and the far) term.