Insuring the Driverless Car

autonomous_driving_cars

I grew up in the early 1970s with Saturday morning cartoons, and even George Jetson had to pilot his futuristic flying car.  I sure miss that guy.  Today’s real-world auto industry is not yet producing flying cars, but there are advances in automated, self-driving technologies.  Some automobiles are now available with automated parallel parking assistance, and there is considerable testing being done with technology to control braking, acceleration, lane control, and collision avoidance.  Google has a grand vision of cars with no steering wheels or brake pedals that totally drive themselves.

I’m fascinated by major technological developments such as this.  So today, I’d like to share a few random thoughts that occur to me as I ponder how this transportation evolution might affect the insurance industry.  First, it is clear that the legal environment has some catching up to do before the more ambitious aspects of this technology arrive at your local auto dealership showroom.  Regulators in states such as Florida and California are still drafting rules to govern what the auto industry will be allowed to bring to market and the degree of testing that will be required before doing so.

From an insurance industry perspective, a number of questions come to mind.  For instance, if/when your self-driving car does hit something or someone,  who is liable?  You, the “non-driving” owner of the vehicle?  The manufacturer and autonomous driving software developer?  Perhaps both share culpability for the accident, but then how are the damages assessed and allocated?  Perhaps this brings about the dawn of a major evolution in the concept of no-fault auto insurance laws.

Some staunch supporters of the autonomous driving technology might argue that collisions will become nearly an extinct possibility when every vehicle on the road is autonomous and constantly sensing and adjusting to its surroundings.  Nice thought, but I’m not buying it.  I’m a recovering software developer… but I still see “bugs” in my sleep.  Now consider this… When self-driving cars find themselves on the verge of an impending collision in a dense highway situation, there will inevitably be times when there is literally “no way out” and someone is going to collide.  In that situation, how will the self-driving software choose what to hit? Will it sense which opposing vehicle is “less vulnerable” to damage/injury (e.g., SUV vs. compact)?  Will vehicles “broadcast” the number and age of its occupants so that in such a “no way out” scenario cars carrying families with young children might be spared?  Is that even morally and ethically just?

How far will we be able to trust the technology?  I’ve already expressed my skepticism regarding bug-free software but what about the simple matter of sensors that could fail or be impaired in poor weather conditions. Who is liable for a sensor that fails because of dense fog or rain or a lack of cleaning?

I’m only scratching the surface here.  I expect that we will see a gradual evolution of self-driving car technology rather than rapid leaps.  There are simply too many questions such as those I’ve raised here.  Regulators will take a cautious approach and the driving population will probably see incremental implementations of autonomous driving technologies such as we’ve seen with the parallel parking assistance feature.  Likewise, the automobile insurance industry will slowly evolve and adapt as the technologies appear in the marketplace.  No doubt there will still be thorny questions to work out and that will lead to insurance coverage adaptations and new case law, especially with regard to the liability aspects.

Fun stuff, but I still miss George Jetson and his flying car.

Risky Business

risk

On November 11th, at 11:00am in BUS 210 of the Ferris State College of Business building, students will gather to hear risk management and insurance professionals discuss a variety of topics.  The discussion will include…

  • Career Opportunities, Compensation, and Rewards
  • A Day in the Life…
  • Insuring Celebrity Body Parts (what is that all about?)
  • Driverless Cars (how will this affect risk and insurance?)
  • Black Swan Events
  • Ebola
  • Cyber Risk
  • Expensive Insurance (why?)

This event will be a great opportunity for anyone interested or curious about “risky business” to learn more.  I encourage anyone who can get to the Big Rapids campus on November 11th to check this out.

 

 

Mining for Scholarships

scholarship-money

Understatement alert…  A college education is not an inexpensive commodity.

Fortunately, there are literally thousands of scholarship opportunities available to students who are willing to seek these opportunities and apply for them.  For those students interested in pursuing an education and career in the risk management and insurance profession, there are several scholarship opportunities from a variety of groups who recognize the need to attract young talent to the industry.

I want to personally and publicly congratulate two Ferris State University students who have earned scholarships from the Michigan Adjusters Association: Sarah Scobey and Scott Sawyer.  Both Sarah and Scott continue to excel in their Ferris State academic work and they should be proud that an association of insurance industry professionals recognizes their potential and is willing to invest in them with these scholarship funds.

Scott Sawyer also earned another scholarship a few months back.  Scott was awarded a scholarship from the Westran Insurance Scholarship Foundation.  This is another testament to Scott’s academic achievements and potential as a future insurance professional.  Congratulations to Sarah and Scott!

There are many other scholarship opportunities available to students of risk management and insurance.  Gamma Iota Sigma provides a handy scholarship deadline tool.  There are also scholarships available from the Insurance Scholarship Foundation of America, InVEST Program, and Spencer Educational Foundation, just to name a few.

Go get some money!

Rebuilding Lives

http://www.dreamstime.com/-image1508608

One aspect of the insurance industry that I believe is undersold in the recruiting process is the opportunity to rebuild broken lives.  On several occasions in recent months, I have written in this forum about the opportunities for a good and stable career in the insurance industry.  But it’s more than just a stable industry with appealing compensation and growing opportunities.  Much more.

When you boil it all down to the basic mission of the insurance industry, it’s all about rebuilding lives that have been disrupted if not turned upside down by an unfortunate event.  It could be as minor as a fender-bender auto accident or as major as the destruction of a home by fire or storm.  Everything we do in the insurance industry comes down to the moment that we help the customer to recover from the fender-bender or rebuild the family home.  We sell the policies with an eye toward covering these loss exposures, we underwrite to offer the coverage that is proper and fair and responsibly priced, we loss control risks to prevent as many losses as possible, we analyze the data to develop proper coverages and rates, and we settle the loss to put the customer’s life back together.  What an awesome mission and privilege.

I have to credit Auto-Owners Insurance Company Chairman and CEO Jeff Harrold who did express this appealing mission to the attendees of his company’s recent career day event which I wrote about here.  Much has been written (here and elsewhere) about the “graying” of the insurance industry with reports that perhaps 25% of the current insurance workforce will retire in the next 4-6 years.  That fact adds some urgency to industry appeals for young talented people to consider an insurance career.  But Millenials want more than a good job.  They want a meaningful job, and so part of the industry’s appeal for young talent must emphasize the noble mission of rebuilding broken lives.  What an incredible opportunity… make a good living, working in a stable industry with significant advancement opportunities, while helping your customers through perhaps the toughest days of their lives.  Sign me up.

Auto-Owners Insurance Company Career Day

auto-owners

Michigan is home to many excellent insurance firms, including carriers, agents, brokers, and service providers.  Last Friday, I took the time to journey to Lansing, Michigan to attend the annual Career Day event hosted by Auto-Owners Insurance Company at their headquarters.  A number of Ferris State University students also made the trip, and I think that they were duly impressed with what they saw and heard.

This post isn’t intended to be an endorsement of Auto-Owners Insurance Company, and by no means do I intend to convey that Auto-Owners is superior to other insurance entities.  I simply want to take this opportunity to describe the day and reinforce some sentiments that have been previously expressed in this forum.

The event began with remarks from Auto-Owners’ Chairman and CEO, Jeff Harrold.  Mr. Harrold also happens to be a Ferris State graduate, so okay, maybe I do have a little bias in favor of his company.  Mr. Harrold spoke to the students about the long history (98 years) and continued growth of Auto-Owners Insurance Company.  He also described the culture of opportunity and personal development for employees at Auto-Owners, and he mentioned the simple demographic truth that there are many aging insurance professionals approaching retirement and that young talented individuals will find significant opportunities to make a career in the insurance industry.  Naturally, Mr. Harrold is hoping that many of the students will seek to begin that career journey with Auto-Owners.

The group heard from people in the actuarial, information technology, and underwriting areas of the company.  Everyone had the chance to take a brief tour of the corporate headquarters and have lunch with the senior officers of the firm, followed by a wrap-up panel session of questions and answers.

It was a well-organized experience that I believe made an impression on the students in attendance.  One thing is clear… excellent companies such as Auto-Owners recognize the need to attract excellent young talent if they are to continue their growth and success.  The insurance industry is rife with stable and challenging career opportunities for today’s young professional in a variety of areas that include actuarial science, information technology, underwriting, business analysts, quality analysts, and more.  It’s anything but boring.

Baby Girl

baby

The primary intent of my social media posts is to highlight topics related to the risk management and insurance industry.  I have tried to mix it up and keep things interesting by occasionally introducing topics that may not immediately seem to be related to risk and insurance, and then making some sort of connection.  Today’s post is not one of those posts.

Sometimes, it’s just good to consider the blessings and miracles of life, and a new baby is at the top of the list when it comes to blessings and miracles.  Well, today I am a very proud first-time grandfather as I welcome Kendall Nicole into the world.  Words cannot describe the feelings and emotions right now.  I close this post by sharing this which describes 25 things that we take for granted but that my new granddaughter may never know in her lifetime.  It’s a testament to how rapidly the world changes with each generation.

Welcome to the world little Kendall.

Big Data – Big Risk?

digital

It’s a match made in heaven – or so it seems.  “Big data” is the term commonly used to refer to the incredibly massive (and still growing) pool of data generated from the digital footprints of our daily lives.  It has evolved beyond the basic retail point-of-sale data on what we buy and where.  Now, big data includes many of our online actions, mobile phone activity, health information from our fitness trackers or smart watches, and all manner of information from the “internet of things” that increasingly permeate our lives.  Surely, all of this data can be used to more accurately assess risk and therefore more efficiently underwrite the insurance of those risks.

This recent Business Insurance article highlights the possibilities of big data and touts the potential benefits of reducing premium costs to consumers while simultaneously improving insurer loss ratios.  Last year, I read Eric Siegel’s book, Predictive Analytics: The Power to Predict Who Will Click, Buy, Lie, or Die, which I highly recommend.  Mr. Siegel described how big data and the associated predictive analytics methodologies were used in President Obama’s successful 2012 reelection bid, and in improving Netflix’s movie recommendations.  Mr. Siegel included several examples of big data and predictive analytics at work, including the Target public relations snafu when they predicted a teenage pregnancy based on buying patterns and inadvertently informed the girl’s father of his daughter’s pregnancy before she did.  The book also described a life insurer who used big data to predict the likelihood of death within 18 months for its elderly policyholders.  Fascinating.  And a little creepy.

My purpose in raising this topic is that I believe we are in the midst of one of those historical moments when our technological capabilities have outpaced the evolution of our societal norms. We clearly have the data and the methods to predict more outcomes more accurately than ever before, but we struggle with the “creepy factor” which is just another way of expressing the inherent privacy concerns.  Do we really want to know when grandma is likely in her final 18 months of life?  Will we rejoice in lower life insurance premiums enough to live comfortably with the fact that our daily activities (and perhaps even our whereabouts) may be reported directly to the insurer by the device we wear on our wrist?  As an industry, is the appeal of big data so great that insurers will accept the cyber risk when a hacker steals sensitive detailed health information for nefarious purposes such as blackmail?

Oh, and don’t even get me started on semi-autonomous driverless cars… That’s a topic for another time.