Autonomous Trucks Could Transform Insurance
In February, Embark, a startup based in San Mateo, CA, announced a self-driving technology that would allow trucks to run on highways with no human input. Unlike technology concepts recently announced by other manufacturers, Embark’s goal is not simply to assist drivers, but to enable completely unmanned trucks to travel on highways from entrance to exit, while continuing to rely on humans for city driving.
Global consulting firm McKinsey and Co. estimates that the economic impact from advances in autonomous vehicles could reach as much as $1.9 trillion annually by 2025. A significant contributor to this earnings boost would be the change—not just in manpower requirements, but in the overall logistics equation—that truly driverless long haul technology would bring to the trucking industry, which, at 64 percent of the value of total freight shipped, continues to dominate the nation’s freight transportation system.
“This is truly a game-changer,” said Michael Macauley, CEO of Quadrant Information Services, a supplier of pricing analytics services to property and casualty insurance carriers. “It very sensibly splits the activity of truck driving into two parts—maneuvering a load around city streets, and long haul driving on the freeway. City driving is complex and unpredictable, so Embark isn’t trying to automate that. However, the vast bulk of the time a big truck is in use is on the freeway. There, full automation can safely be used—with a staggering boost to productivity.”
At the moment, trucks are designed to carry around 12 hours’ worth of fuel; more would be unnecessary weight, because truck drivers refuel when they stop to rest for the night. But a self-driving truck could carry all the fuel it needed to get from its starting point to the final destination, driving continuously until it arrives. This would mean that trucks would be on the road non-stop, making the rigs themselves more profitable. It would also mean faster delivery times, as loads wouldn’t be stationary once they departed.
One potentially effective way to deploy totally autonomous trucks, Macauley noted, is through platooning, which comprises a number of automated trucks, one following the other and mutually communicating. With the following trucks able to brake immediately with zero reaction time, platooning can improve traffic safety. It’s also a cost-saver, as running the trucks close together at a constant speed reduces fuel consumption and CO2 emissions.
To encourage the development of autonomous trucking technology and platooning, the states of Michigan, Ohio, and Pennsylvania announced the formation of the Smart Belt Coalition early this year. The research and development group is made up of the departments of transportation in the three states, the University of Michigan, Ohio State University, and Carnegie Mellon University, as well as the Ohio Turnpike and Infrastructure Commission, the Pennsylvania Turnpike Commission, and Ohio’s Transportation Research Center.
As to the potential effects of fully autonomous trucking technology on jobs, Macauley points out that there is currently a severe shortage of truck drivers in the United States. “The industry that’s really going to be impacted,” he said, “is insurance. Remember, the development of these fully autonomous trucks isn’t happening in a vacuum. There’s also tremendous interest in self-driving cars and buses, and maybe even passenger-carrying drone aircraft.”
Given the complexity of the technological and liability issues involved, it’s entirely possible that vehicles will be owned by manufacturers and leased on a long-term basis to transportation companies. That means that property and casualty insurance carriers and agencies will transition from selling to consumers to selling to makers of autonomous vehicles. To navigate that change successfully, insurers will need to know as much as possible, as rapidly as possible, about what’s happening to their markets.
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