Earlier this year, Donald Light, the director of Celent's Americas P&C insurance practice, advised insurers to prepare for a scenario in which auto insurance premiums dropped drastically. Last week the National Transportation Safety Board made that scenario a little more plausible by calling for mandatory automated safety features that help drivers avoid accidents.
Light's scenario was admittedly "provocative," but his hypothesis that increasing use of automated safety features could significantly reduce automobile accidents — and thus cause corresponding decreases in auto insurance premium — becomes more plausible as pressure increases for auto makers to standardize safety features, such as lane departure and collision warnings. A full menu of safety technologies could reduce accidents by half, according to federal accident investigators, reports NPR:
The technologies include lane departure warning, forward collision warning, adaptive cruise control, automatic braking and electronic stability control. They are available on many cars and trucks already, although some are limited primarily to higher-end models. The National Transportation Safety Board said they should be required on all vehicles, despite the auto industry's concern that doing so could add thousands of dollars to the cost of a new car.
Auto makers are resistant to the idea of mandating such features, saying that a fragile economy is not the time to force higher costs. Proponents of mandates argue that costs will quickly drop as mandates force manufacturing of the features on a grand scale. The NPR article notes that while the NTSB doesn't have regulatory authority to actually mandate safety features in automobiles, "its recommendations carry significant weight with Congress and with federal and state agencies."
[For more on Donald Light's reduced auto insurance premium scenario, see Prepare for Deep Auto Insurance Premium Drop Scenario, Celent Report Advises.]
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio