The Future of Automobile Insurance in the Era of Autonomous Vehicles

Congressional Documents & Publications

PRESS RELEASE

May 23, 2018

Contacts: Sarah (Rozier) Flaim (202) 226-2467; Keeley Christensen (202) 225-5066

WASHINGTON - The Housing and Insurance Subcommittee met today to examine the development of the autonomous vehicle and its effect on the future of automobile insurance. For the first time, emerging automobile technology is intersecting with the financial industry, changing the business of property and casualty insurance. Today's hearing examined the relationship between insurance companies, automobile manufacturers, and technology companies to better understand the impact of autonomous vehicles on the future of insurance policy.

"Technology is catching up with movies like Blade Runner, Demolition Man, and Minority Report," said Subcommittee Chairman Sean Duffy (R-WI). "The capabilities of fully autonomous vehicles are being tested in cities across America. Auto insurance policies have already been impacted by autonomous vehicles and autonomous technology. Safety is and will be a top concern for the public's view of autonomous vehicles, and today's hearing was an incredible opportunity to hear about autonomous vehicles' impact on auto insurance, data sharing, and Congress' role as the technology continues to develop."

Key Takeaways

*Autonomous vehicles will become the majority of vehicles in 20 years, and will have significant impact and change for a competitive private insurance market in terms of risk-management and regulation.

*The U.S. system of state-based insurance regulation established by the McCarran-Ferguson Act remains strong and can adapt to the development of emerging technologies, such as autonomous vehicles.

*The business of insurance must adapt its practices to reflect levels of uncertainty associated with the transformation of mobility that the country will experience.

Topline Quotes from Witnesses

"Key issues for... insurers in this public policy discussion relate to our ability to assess risks presented by our customers, to price that risk appropriately, and to handle claims... There is a greater understanding of the role of the insurance industry as a stakeholder in the future of these technologies... As laws expand and are amended to allow for testing and implementation of these technologies, it will be appropriate to determine how insurers can appropriately match price to risk and develop new products." - Ryan D. Gammelgard, Counsel, State Farm.

"The development and deployment of proven, safe [Automated Vehicles] will require significant technological advances, regulatory changes, and an active partnership between technology companies, vehicle makers, insurance companies, and the government... Insurance will need to evolve to address changes in both vehicle technology and the increased vehicle sharing that is enabled by that technology... Ultimately, the insurance industry... should be a partner to technology companies, vehicle manufacturers, and regulators to promote safety on our roads." - Sam Geraci, Vice President-Strategy, American Family Mutual Insurance Co..

"As is true today, the role of insurance in an era dominated by highly automated technologies will continue [to] provide financial certainty to the owner and operator of a vehicle in the event of an accident, theft or other damage to that vehicle... in a world of autonomous vehicles, insurance may play additional roles... While obstacles remain... we believe that private insurance... is well positioned to aid in the adoption and proliferation of the technology." - Ian Adams, Assistant Vice President, R Street Institute.

"We appreciate the Subcommittee's efforts today and going forward because, quite frankly, we have many more questions about insuring the AV than answers. The good news is that this Subcommittee is beginning to raise and address these questions and, as a practical matter, because the AV is still in a relatively early stage of development, there is no need to rush to judgment when it comes to resolving the intricacies associated with insuring these extraordinarily complex products." - Jack Gillis, Consumer Federation of America.

"The shift is on. Society is moving from driving our individually owned cars, to sharing cars that we or someone else drives, to sharing cars that are autonomous. The effect of this is nothing short of revolutionary. Policymakers should embrace the significant social and economic benefits now and the insurance sector must be nimble and willing to change the way it views risk and offer competitively priced enhanced insurance for the next millennium." - David T. Carlson, U.S. Manufacturing & Automotive Practice Leader, Marsh & McLennan.

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