Should auto insurers offer V2X discounts?

In a rapidly evolving automotive landscape, the role of insurers in supporting advanced vehicle safety technologies is crucial. Although some safety features struggle to gain recognition, V2X (vehicle-to-everything) technology has the potential to change the game entirely.

Some insurers offer discounts for safety features such as lane keep warning/assistance or automatic emergency braking/forward collision warning, but many do not. This reluctance often stems from difficulties in identifying these features in a vehicle, as well as high repair costs and concerns about drivers becoming overly dependent on technology.

V2X, which enables vehicles to communicate with each other, with infrastructure, with pedestrians and with networks, differs in this regard. The only challenge for insurers is confirming whether a vehicle has V2X. Soon, V2X will predominantly provide warnings from infrastructure, such as road work notifications. A V2X transponder installed on road work vehicles and signs ensures detection without needing cellular coverage or manual database updates. V2X infrastructure can also warn of accidents ahead, the end of traffic jam queues and red-light violations.

Smart intersections further enhance the capabilities by adding sensors that can identify all road users, including those without V2X. With that, smart intersections can warn about the presence of red-light runners, two-wheelers and pedestrians at risk, as well as other potential hazards.

Statistics from the United States highlight the life-saving potential of V2X: In 2021, 1,109 fatalities occurred due to red light accidents (Insurance Institute for Highway Safety - IIHS), and 963 fatalities were linked to road work (Federal Highway Administration - FHWA). Together, these account for around 5% of all road fatalities. There are nearly 90,000 crashes into road works and 120,000 red light violations that are non-fatal but incur damages and injuries to those involved. V2X infrastructure deployment can effectively eliminate these unnecessary fatalities and accidents.

Insurers could offer discounts selectively based on the presence of V2X infrastructure in specific regions. Residents of U.S. cities where V2X technology is currently piloting should receive discounts as this technology would reduce red light accident rates. The U.S. Department of Transportation's V2X deployment plan aims to extend this infrastructure all across the country, allowing most urban areas and states to benefit from these discounts.

Insurers will have no reason to worry about the repair cost for V2X, as it is often well-protected in accidents. In contrast, other safety technologies, such as front cameras or side mirrors with blind spot detection, are more exposed to damage and can be expensive to repair or require recalibration after accidents.

Initially, V2X will focus on providing infrastructure alerts, so drivers are not expected to develop dependency on these warnings. Drivers are unlikely to not be mindful of road work or traffic lights just because they expect a V2X warning.

Since taxpayers indirectly fund V2X infrastructure through taxes, providing insurance discounts would offer a morally justified financial incentive, alongside the inherent safety and comfort benefits.

V2X is highly effective and, together with planned infrastructure deployments, could save thousands of lives each year in the U.S. alone. Preventing fatalities from road work accidents and red light violations could significantly impact road safety. Even if V2X achieves only 50% efficiency, it could still reduce overall road fatalities by about 2.5%. Offering a 1% insurance discount in areas with V2X infrastructure would boost demand for V2X, ultimately leading to safer roads, while insurers would see a reduction in expenses by double that amount.

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Onn Haran is the founder and chief technology officer of Autotalks, and the inventor of the world's first V2X chipset. Contact him at onn.haran@innfeedback.com.