How the insurance industry is grappling with covering AI, smart devices, and driverless cars
Key takeaways:
- The insurance industry must evolve along with technology
- Changes relate to new analyses and risk assessments
- Insurance must also address the needs related to cyber events and connected devices
Technology is continually evolving, with artificial intelligence (AI), the Internet of Things (IoT), and driverless cars leading the way to the future. It seems like there’s a new technology every other week! While these tools can certainly enhance efficiency and safety, they present complications for the insurance industry.
The big question becomes, how do we insure things like machine learning systems, Internet-connected devices, and driverless cars? They don’t come with the traditional risks of the past. We talk about the future of insurance as those in the industry seek to come up with an answer.
Problem 1: AI and cloud-based networks
AI or machine learning helps power major Internet sites like Google, Amazon, and Microsoft. It allows you to look for a new car on a search engine, helps suggest products you might want on Amazon, and allows hotels and other venues to learn your preferences to create a more personalized experience. Unfortunately, even the most “intelligent” systems are not completely immune to hacks. Cyberattacks have affected most of these companies.
Thousands of large corporations and small businesses have faced cyberattacks stemming from cloud-based networks. These networks connect computers and other devices wherever they might be. These attacks cost millions in lost revenue and put customers at risk of having their private data and financial information stolen.
Problem 2: IoT
You may not be as familiar with the term IoT, but it’s likely you have IoT devices in your home or driveway. IoT refers to everyday devices that are connected to the Internet. They can include cars, smartwatches, fitness bands, and appliances like your refrigerator or A/C unit. These devices can communicate with you and each other.
There are expected to be around 75 billion IoT devices by 2025. Devices that communicate with each other certainly provide benefits in terms of efficiency, decision-making, and making accurate predictions. Their ability to collect a massive amount of data can work to make your life easier. However, they too are vulnerable to cyberattacks, putting your data at risk.
Problem 3: Driverless cars
Driverless cars are being developed as we speak. Driverless features are already being used on some existing car models. Many experts like the idea of autonomous vehicles because they believe the technology can reduce driver errors, and thus, car accidents.
There are questions about the ultimate safety of these vehicles, however, especially when dealing with city traffic, twisting roads, or changing weather conditions. Accidents have been recorded, although the number has been low. There are also issues related to the collection of data that enables these vehicles to communicate with each other. That same personal data could be hacked by cyberthieves and used in different ways.
Problem 4: Insuring high-tech devices and systems
Just like technology evolves, the insurance industry must evolve, as well. The insurance model is based on its ability to analyze and assess risks. Data runs the industry, forming decisions about policies, coverage, and premiums. Experts rely on experience, long-term analytics, and a huge collection of information for any insured products, which may not be available for new technology.
For instance, how do you insure a driverless car? How do you determine liability for an accident? Is it the driver, the computer system, or the manufacturer? What about repair costs? Accident and injury rates might go down, but how much might it cost to fix major or even minor damage? A fender-bender is one thing, but the sensors and cameras required in autonomous vehicles are expensive and not easily repaired.
How do you analyze risk assessment for IoT devices or cloud networks? How does a business protect against cyber events or system failures that shut down operations? These are the questions insurance agents are grappling with.
What type of insurance should be offered?
Another question concerns what type of policy will cover different types of technology? Does cyber liability insurance offer the right coverage for AI or cloud-based systems? Will auto insurance cover driver liability as well as hacks by cyberthieves? Can homeowners’ insurance cover IoT devices and appliances?
All of these questions are looking for answers and the insurance industry is working to develop new standards to cover 21st-century technology.
Taking care of your needs no matter what comes
No matter what the future brings in terms of technology, Avante Insurance will always seek to provide the best service and insurance products to our customers. We offer personal insurance solutions for your home, apartment, car, and life. We also provide commercial insurance solutions, including property, commercial and professional liability, workers’ comp, and commercial auto.
If you have questions about your insurance needs, contact us and request a quote. We will ensure you have the right coverage to protect your personal property and business assets. We’re always standing by.
This blog and website are made available by the publisher for educational and informational purposes only. It is not to be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state.