Autonomous Vehicles

Impacts on the General Vehicle Industry

Evan Cooper and James Pearson

Agenda

• An Introduction to Self Driving Vehicles

• The History

• The current and future players

• Modelling and Assumptions

• How will this impact the industry if there is no industry shift?

• Expectations and Alternatives

Self Driving Cars

Vehicle Automation

The Timeline of Automation

1980s

ABS

2019-2021

Large retailers expecting

to release autonomous

cars

2015

Google driverless car

fully self driven ride

1990s

Traction and stability

control

2009

Google self driving car

project begins

2012

Google self driving car

ride on city streets

2013

Lane keeping

technology

LIDAR – Light Imagining, Detection and Radar

Tesla Vision

Software, Neural Networks and Cars Communicating

The Trolley Problem

Autonomous Car Impact Model

• Premiums

• Claims

• Relative Risk by Age Bracket

• Comprehensive and Third Party Cover

• Uptake of Autonomous Vehicles

• Number of Autonomous and Non-Autonomous Vehicles

• Autonomous vehicle crash rates

Premium and Claims Assumptions

Overview of the motor vehicle industry

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

15-24 25-39 40-59 60+

Total Cover Comprehensive Thirdparty Not insured

Source: 2009 – Ministry of Transport Vehicle Insurance Report

Crash Rates and Age

Source: 1995-2010 - Motor Vehicle crashes, injuries and deaths in

relation to driver age – USA

An Overview of the Road Toll Trend and Drivers

Source: 2011 - Motor Vehicle crashes in New Zealand

Crashes causing Injury and Death by Age

0

10

20

30

40

50

60

70

16-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75+

Age Group

Source: Ministry of Transport Licence and Fleet Statistics – Crash and

Casualties report

Online Quotes for Car Insurance

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

16-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75+

Premium Assumptions – $702 per unit population

0

200

400

600

800

1,000

1,200

1,400

1,600

1996 1999 2002 2005 2008 2011 2014

Millio

ns

Predicted Premium Actual Premium

Source: 1996-2015 – Insurance Council of New Zealand

Claims Assumption – 69.5 cents per dollar

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1996 1999 2002 2005 2008 2011 2014

Billio

ns

CPI adjusted claims Predicted ClaimsSource: 1996-2015 – Insurance Council of New Zealand

Car Uptake and Population Assumptions

Uptake

0%

10%

20%

30%

40%

50%

60%

18-29 30-44 45-54 55-64 65+

Safe Not SafeSource: Morning Consulting - 2016

Uptake

0%

10%

20%

30%

40%

50%

60%

Male Female

Safe Not SafeSource: Morning Consulting - 2016

Current Vehicles Over Time

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2000 2002 2004 2006 2008 2010 2012 2014 2016

Mill

ions

2015-19

2010-14

2005-09

2000-04

1995-99

1990-94

-1989

Source: 2015 - Ministry of Transport – Annual Vehicle Fleet Statistics

Current Vehicles Over Time

-20

-10

-

10

20

30

40

50

60

70

80

2000 2002 2004 2006 2008 2010 2012 2014

Th

ou

san

ds

Net growth Vehicles out Vehicles in

Source: 2015 - Ministry of Transport – Annual Vehicle Fleet Statistics

Number of Autonomous Vehicles over time

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046

Mill

ion

s

Total Autonomous Total Non AutonomousNet growth rate – 2% per annum

Scrap rate – 4.8% per annum

Uptake – exponential, 0% - 2016, 100% - 2030

Expectations and Alternatives

Earned Premium Sensitivity – Varying crash rates

0

500

1,000

1,500

2,000

2,500

3,000

2016 2019 2021 2024 2026 2029 2031 2034 2036 2039 2041 2044 2046

Millio

ns

Modelled Premium

Premium 70% C.R

Premium 40% C.R

Premium 20% C.R

Alternative Models of the Automotive Industry

• Private Ownership vs Ride Sharing

– Theft and Damage

– Crash Liability

• Regulatory Changes

• Will it be an insurable market

• Cyber insurance

Conclusion and Discussion