Autonomous vehicles may lower collision rates by up to 80 percent

Autonomous vehicles have moved well beyond the prototype stage and are expected to be on roads by 2020.

By Jeff Sanford

Toronto, Ontario — February 4, 2016 — The era of driverless cars and trucks is coming fast. Is your organization prepared?

For those looking to keep up with the emerging trend of automated vehicles (AVs) the Conference Board of Canada will host the first Canadian conference on AVs, this coming April 19 and 20. The title of the event captures the theme: Planning the Next Disruptive Technology.

According to promotional material provided by the Conference Board, “Several manufacturers have indicated that automated vehicles will be on the market by 2020. As it stands, many Canadian jurisdictions simply aren’t ready for a future that includes AVs. To ensure a positive driver less future, we need to start planning now.”

Taking up this deep and fascinating subject will be a large slate of speakers. Among them will be Barrie Kirk, Executive Director of the Canadian Automated Vehicles Centre of Excellence (CAVCOE).

His organization published a report in conjunction with the Conference Board last year. This conference will expand on that work. “It’s the first event with the Conference Board. We’re really pleased with that,” said Kirk in an interview with Collision Repair magazine. “It’s becoming a subject that many more people are aware of and thinking about.”

He went on to talk about some of the issues he thinks will be important in the emerging world of AVs. “One of the things I find really exciting and interesting about the AV story is that the story links into so many areas of our daily lives. So many businesses and governments are linked to vehicles in so many ways. Think of policing, health care, government revenue, urban planing, the auto industry, the technology industry. Governments are still getting their arms around it,” said Kirk. “But we need to pay attention to this. It’s coming. The same magnitude of change that occurred in the 20th century when cars first began to appear will be repeated in the 21st century. This is going to change everything.”

Kirk is not afraid to be explicit and blunt: There will be change and disruption in some industries. “Last year I spoke to two different insurance conferences. My message was, starting about 2020, the auto insurance business model is going to be severely disrupted, for all kinds of reason that are coming together just now,” says Kirk. “We think there will be about 80 percent fewer collisions, and therefore 80 percent fewer cars that need repair. Volvo and Mercedes have already announced they will bundle the cost of liability with the car. There is so much confidence in the software you’ll have liability insurance for life built into the price of the car. That’s going to be worrying for auto insurers.”

Kirk goes on to note that a trend toward less individual ownership of vehicles is already underway. “The trend has already started. Millennials are not buying cars like my generation did,” he says. “With the arrival of AV self-driving cars … Uber is developing their own self-driving car … there will be a lot fewer individual policies written, but a lot more commercial fleet policies. If you have a company that has 100 driverless taxis, you will have one policy. The insurance industry is going to have to be a smaller and a different market. There will be winners and there will be losers.”

Kirk sees the coming wave of AVs as part of a bigger wave of industrial change. Some now use the term Industrial Revolution 4.0 to describe what’s happening. The first industrial revolution saw coal burned to heat and power steam engines allowing goods to be manufactured in great quantities. The second industrial revolution saw the arrival of electricity. The third was the digital revolution and the arrival of computers. Now the machines get hooked up to the computers in the so-called Fourth Industrial Revolution.

“This was the theme in Davos in Switzerland a couple weeks ago at the World Economic Forum,” says Kirk. “This is coming.”

Of course, even with AVs there will always be a need for vehicle repair shops. Trees will still fall on cars. Vehicles will still be damaged, scratched and dented. However, there seems little question that we will eventually see an overall decrease in collision claims once this technology fully comes of age. Reports seem to agree that we will start to see AVs for sale in or around 2020. It typically takes almost 20 years for any new technology to get to 95 percent of the fleet as older vehicles are taken off the road and new vehicles purchased to replace them. Extrapolating from there, the AV rollout should be complete around 2040, but there are certain to be impacts for the insurance and auto industries long before that.

For more information, please see “Automated Vehicles: Planning the Next Disruptive Technology.”

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