The Insurance Nerdery is a new video series that examines the insurance implications of all kinds of things. The most recent episode is about autonomous vehicles. I encourage you to take a look at this episode…it’s less than 7 minutes long.

Being a coverage nerd, I noted several analogies between autonomous vehicle issues and coverage issues. The following is a bullet list of points from the video and the connections I made to coverage and the emerging role of technology.

Autonomous systems can be very different. The lack of standardization can complicate use, service, and repair. The same is true of insurance policies. Insurance is not a commodity…policy differences introduce greater complexity, complicating use and the ability to sell and service the product.

Users don’t understand the systems. That’s an understatement for insurance policies where almost no users understand insurance contracts and far too many insurance industry players lack a working knowledge of their products.

There are inherent problems in the human/machine overlap. This has been the case with insurance coverage since the advent of comparative rating systems that have focus the sales process on price rather than coverage. This is exacerbated by insurtech ventures who add convenience via phone apps (“fast, easy and cheap”) as the focus of value.

User skill will atrophy. As dependence on technology increases, user proficiency will decline. With immediate access to calculators, I’m not even sure the “times” tables are taught in school anymore. As automated underwriting systems have advanced, underwriter diagnostic skills and coverage knowledge have arguably declined.

While autonomous vehicles should result in lower claim frequency, the cost to research, build and repair autonomous systems will likely result in greater physical damage claim severity. Similarly, the introduction of technology in the insurance industry, from predictive modeling to insurtech apps may reduce operating costs, but could underwriting results worsen?

Is technology progressing faster than humanity can handle? Will growing industry infatuation with “big data,” predictive modeling, and insurtech dehumanize an industry whose very existence is based on assisting individuals, families, and organizations in identifying their exposures to loss and properly insuring or risk managing them so as to minimize the likelihood of serious or catastrophic losses?

Interesting issues and a great start to a new video series. I recommend you subscribe to the Insurance Nerdery YouTube channel.

Photo by wuestenigel

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Bill Wilson

Founder at InsuranceCommentary.com
One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America. Reprint Request Information

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