While the global auto industry is developing and inducting in vehicles crash avoiding technologies, insurance companies are cautioning consumers who are seeking a discount in insurance for purchasing vehicles fitted with automated cruise control modes collision-avoiding braking technologies.
According to estimates, by 2025, the global market for ADAS or the advanced driver assistance systems would be touching a value of more than $67 billion and would grow at a CAGR of 10 per cent. On the other hand, a group of 20 car manufacturers have announced that by 2020, they would be fitting almost every vehicle they manufacture with technologies like forward collision warning systems and city-speed automatic emergency braking mechanisms.
While vehicles with such technology promise to deliver high profit margins, the ADAS market is also being driven by some governments making it mandatory to install technologies like the collision avoiding automatic brake systems.
“Anybody that has been in a car with advanced safety solutions is not going to go back,” Kevin Clark, chief executive of auto technology supplier Aptiv PLC told the media. Clark said that the cists for development and fitting of advanced safety systems such as automatic braking, lane keeping and automated cruise control, would not be very high for car makers and would be between $500 and $1,000 for every vehicle. “The (manufacturer) can price for it and consumers will pay for it,” he said.
This year, more than $4 billion in new ADAS business is expected to be booked by Aptiv. “We have gone from five customers just a few years ago to I think we’ll have north of 20 in a couple of years from now,” Clark said.
However a different perspective is being proposed by the global insurance industry.
Data from the United States National Association of Insurance Commissioners that in 2018, more than $244 billion was generated for insurers in the US from personal auto insurance which is the largest source of liquidity for insurance companies even though it is a low margin business. Insurers also view the sector of motor insurance to be one that allows them to engaging in cross selling of products that are more lucrative for the companies.
There is potential of motors accidents being reduced by 25 per cent because of ADAS which would result in lowering of global insurance premium for vehicles that are fully ADAS-equipped by $20 billion by 2020, said mapping company HERE, and the largest auto reinsurer of the world Swiss Re AG.
However insurers in the US are currently not equipped with enough data for validating auto industry promises of safety benefits from automated driving systems. The insurers claim that car makers are very reluctant to provide them with details about models that are sold with automated safety features, a significant lack of consistent standards, the unpredictability of usage of such systems by drivers and higher costs of repairs and point out these to be the necessary data that they require.
“We’re not going to go against the data and create any type of false discounts for the purposes of marketing at this point. We just want to make sure the rate is reflective of the risk that it brings,” said Steve Armstrong, a vice president of Allstate Corp’s pricing department, one of America’s largest insurers.
“We’re stuck in a murky in-between,” said Jennifer St. John, national auto claims leader at Westfield Insurance. “ADAS have shown to provide real world benefits, but there really isn’t a great deal of commonality in terms of what’s out there.”
(Source:www.reuters.com)
According to estimates, by 2025, the global market for ADAS or the advanced driver assistance systems would be touching a value of more than $67 billion and would grow at a CAGR of 10 per cent. On the other hand, a group of 20 car manufacturers have announced that by 2020, they would be fitting almost every vehicle they manufacture with technologies like forward collision warning systems and city-speed automatic emergency braking mechanisms.
While vehicles with such technology promise to deliver high profit margins, the ADAS market is also being driven by some governments making it mandatory to install technologies like the collision avoiding automatic brake systems.
“Anybody that has been in a car with advanced safety solutions is not going to go back,” Kevin Clark, chief executive of auto technology supplier Aptiv PLC told the media. Clark said that the cists for development and fitting of advanced safety systems such as automatic braking, lane keeping and automated cruise control, would not be very high for car makers and would be between $500 and $1,000 for every vehicle. “The (manufacturer) can price for it and consumers will pay for it,” he said.
This year, more than $4 billion in new ADAS business is expected to be booked by Aptiv. “We have gone from five customers just a few years ago to I think we’ll have north of 20 in a couple of years from now,” Clark said.
However a different perspective is being proposed by the global insurance industry.
Data from the United States National Association of Insurance Commissioners that in 2018, more than $244 billion was generated for insurers in the US from personal auto insurance which is the largest source of liquidity for insurance companies even though it is a low margin business. Insurers also view the sector of motor insurance to be one that allows them to engaging in cross selling of products that are more lucrative for the companies.
There is potential of motors accidents being reduced by 25 per cent because of ADAS which would result in lowering of global insurance premium for vehicles that are fully ADAS-equipped by $20 billion by 2020, said mapping company HERE, and the largest auto reinsurer of the world Swiss Re AG.
However insurers in the US are currently not equipped with enough data for validating auto industry promises of safety benefits from automated driving systems. The insurers claim that car makers are very reluctant to provide them with details about models that are sold with automated safety features, a significant lack of consistent standards, the unpredictability of usage of such systems by drivers and higher costs of repairs and point out these to be the necessary data that they require.
“We’re not going to go against the data and create any type of false discounts for the purposes of marketing at this point. We just want to make sure the rate is reflective of the risk that it brings,” said Steve Armstrong, a vice president of Allstate Corp’s pricing department, one of America’s largest insurers.
“We’re stuck in a murky in-between,” said Jennifer St. John, national auto claims leader at Westfield Insurance. “ADAS have shown to provide real world benefits, but there really isn’t a great deal of commonality in terms of what’s out there.”
(Source:www.reuters.com)
