One of the things that I have really enjoyed about Liberty Mutual is the variety of intern programming offered to us interns to expose us to different opportunities within the company as well as different components of the insurance industry.  Between trainings in topics ranging from Excel to predictive modeling, an Executive speaker series, networking lunches, and weekly debriefs with intern program leaders, Liberty Mutual insures that interns aren’t sitting at their desks all week and have the chance to learn about the different parts of the multifaceted company for which we work (misspelling intended as pun).  This week, the actuarial interns were split into two groups to first talk about our individual projects and then discuss a trending topic: self-driving cars.  After doing some research beforehand then discussing the subject with my fellow interns, I’m definitely intrigued by the subject.

Without a doubt, autonomous vehicles are not far from having a significant presence on America’s roadways.  Nearly 50 companies are working on developing self-driving cars, and the number increases every month.  The most prominent companies in the autonomous race, including Apple, Google, Tesla, Uber, Volvo, Audi, and GM, aim to roll out publicly available models between 2018 and 2022, and though usually such estimates are rarely met, the level of competition and potential market lead me to believe that this date will be sooner rather than later.  This pace makes it extremely difficult for regulators and insurance agencies to keep up, as autonomous cars require a completely different set of laws and calculations that are hard to create until these massive company secrets are unveiled.  According to a survey from earlier this year, 75% of people would be scared or refuse to drive in a driverless car.  I, on the other hand, would feel just fine falling asleep with a computer ‘behind the wheel’.  As compared to me, a machine can have a better reaction time, peripheral vision, accuracy, and awareness, and will not get fatigued or distracted.  Machine learning allows vehicle to learn from their mistakes, and we have top programmers from around the world working to make sure that these vehicles are as safe and effective as possible.  Sure, computers fail and freeze every now and then and could potentially get hacked, but humans can also do the former two, and I am confident that manufacturers will do all in their power to create the safest cars imaginable.  I would sure love for my first car to be self-driving, and am going to keep close tabs on the market to see if I can time my purchases so this can happen.

The most difficult phase for regulators and insurance companies to handle is the transitional one where cars are somewhat automated and humans and machines share the road.  Already, most new cars are semi-autonomous, whether having assisted parking, blind spot monitoring, automatic acceleration, or emergency braking features.  Some states have laws requiring a human to be in the driver’s seat of a car or for all automobiles to have steering wheels and pedals.  In the long run, this makes little sense.  If cars are driving themselves, people will not be ghost-driving for months just to jump in the one time the system messes up; humans at the wheel will be a nonfactor.  Even in the first autonomous vehicle fatality, the driver had 7 seconds to recognize the problem and correct it, but didn’t because he trusted the car.  Companies are doing all they can to smooth this transition, trying to make autonomous cars behave more like humans, from displaying cues at busy intersections to keeping with the flow of traffic on highways.  Though there may be a transition period, it may be shorter than anticipated.

So what does this mean for insurance companies?  For one, the death of the personal auto insurance industry seems inevitable.  People will no longer be at fault for the myriad car accidents that currently occur on a daily basis, as the humans will have no control over the cars.  Instead, the company that manufactured and programmed the car will be at fault.  Recognizing this, some companies have already begun to offer insurance plans along with their cars.  However, these policies could turn out to be expensive for companies, especially with accident-prone human-driven cars still littering the roads.  Therefore, I anticipate the insurance industry switching to insuring car companies, dealing with corporations rather than individual consumers.  Along the way, insurance companies will have to hire dozens of experienced programmers in order to decipher each car’s code and see which company has the safest car.  This will be extremely difficult, but in order to stay alive, I predict that insurance companies will have to take these measures.

However, we cannot assume that the whole concept of owning a car will remotely resemble its current state in even 25 years.  Many companies are also working on developing carsharing systems with their vehicles, preventing automobiles from sitting unused for most of their lives and instead using them to transport multiple people as they request.  Whether the future brings fleets of cars roaming about to find riders or the ability to summon your car when and wherever you please or a complete elimination of parking, we must approach the future with an awareness and openness to all of the possibilities that may arise and with strategic plans for each situation, never reacting, but always anticipating.

I know that I personally am never one to be up on the latest tech trends.  Always that guy who insists on using cash instead of venmo and listens to CDs instead of online radio (maybe I’m really dating myself here), I prefer to just keep going with what works for me instead of considering what the present, let alone future, may bring.  However, if I am to be a leader in tomorrow’s business world, I must not only acknowledge, but anticipate and embrace technological changes.  Leaders of insurance companies will get left in the dust if they insist on the same pricing models and policies as yesteryear, and must adapt to whatever type of vehicular world is on its way if they want to stay in business.  Considering these concepts is really forcing me to evaluate my future career strategies and behaviors, and reminds me of the importance of accepting and capitalizing on the exciting changes that are quickly developing in today’s technological scene.