Automated vehicles would require rethinking assessment models: Swiss Re Canada CEO

The move toward increasingly automated vehicles demands that the insurance industry adjust its thinking and models which currently assess the driver more than the vehicle, Sharon Ludlow, president and CEO of Swiss Re in Canada, suggested during a presentation in downtown Toronto Thursday.

“For all of us involved in casualty, this is going to impact the way we do business,” Ludlow told a room full of senior insurance and reinsurance representatives attending Swiss Re’s 29^th Annual Canada Outlook Breakfast.

“On the face of it, we imagine that accidents and incidents of driver error will decrease,” she said. “But with increased automation comes the possibility of system malfunction, meaning we may have less frequent, but more severe accidents and, therefore, claims,” she added.

“There is no doubt that autonomous vehicle technology will come to the mass market. The question is how, where and when,” Ludlow told assembled guests.

But automated cars are not the only examples of emerging risk meeting technology. Ludlow pointed to the use of drones, which she said “we can expect to see them creeping into our normal, everyday life.”

But what impact will this technology have on insurers? To determine risk, she said, questions will need to be answered revolving around, among other issues, if fire damage on a drone is to be covered under a normal property policy, if business interruption coverage is to be offered if the drone is not operational and how to deal with a claim should a drone be used for a malicious act.

Any such risks would need to be properly evaluated and quantified, Ludlow said.

The same can be said for cyber security, which though not a new risk, is an issue that has come to forefront as a result of “recent widespread data breaches.”

In addition, some plaintiff lawyers are seeking coverage under different types of policies, not solely under cyber liability insurance policies, Ludlow pointed out. Whatever the industry, it is “scrambling to interpret if and how policies should respond to these data breach claims.”