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As the deployment of autonomous vehicles ramps up globally, all sorts of prickly regulatory questions are cropping up. Which parties should be held responsible if a self-driving car swerves off course and kills a pedestrian — the driver, the automaker, or the systems supplier? And what kind of safeguards should be legislatively mandated to ensure there are backups in case something goes wrong?
Insurance for autonomous vehicles is yet another topic that’s been thoroughly picked apart by pundits but that remains far from settled. Hazy liability in the event of an accident could lead to lengthy litigation and a cascade of claims. But one startup — Avinew — is taking an optimistic view.
The Westlake Village, California-based insurance technology company, which was founded by Dan Peate, former assistant vice president at London financial services firm Aon, offers coverage to folks and fleet operators who own cars equipped with advanced safety features. Avinew has completed proof-of-concept pilots with two insurers ahead of a launch in select U.S. states this year. It’s betting its model will bring in a sizeable chunk of the $81 billion in new premiums autonomous vehicles are expected to generate by the end of 2026.
Avinew today announced that it has raised $5 million in a seed financing round led by Crosscut, with participation from American Family Ventures, Draper Frontier, and RPM Ventures. Coinciding with the infusion of fresh capital, Avinew brought on Jeremy Snyder, who previously served as Tesla’s head of global business development and special projects. He’ll assume the role of chief operating officer at Avinew.
“The cars we drive are changing, and there’s a huge opportunity for auto insurance to change as technology helps our cars and roads become safer,” Peate said. “Our goal is to enable the safety, savings, and freedom that come with autonomous driving. We believe providing consumers with insurance solutions that incentivize them to use [certain safety] features … will make the roads safer for all of us.”
Distilled to its basics, Avinew’s usage-based insurance program employs an AI-driven mobile app to collect telematics data and detect when semi-autonomous or autonomous features (think Tesla’s Autopilot, GM’s Super Cruise, Ford’s Co-Pilot 360, and Nissan’s ProPILOT Assist) are “responsibly” engaged. From this, it determines whether policyholders are eligible for a discount on their premiums.
During the pilot tests, nearly 7 in 10 participating Tesla drivers said they’d consider switching to an insurance policy that included a discount for Autopilot usage, according to Avinew.
“We are impressed by the innovation and ingenuity that Dan and the team at Avinew are demonstrating as they strive to reinvent auto insurance for the autonomous age,” said Rick Smith, managing director at Crosscut. “Avinew is well on its way to bringing auto insurance programs to market that will incentivize and inspire consumers to embrace and use new auto tech in their daily lives. It’s a tremendous opportunity.”
Usage-based insurance, or UBI, is nothing new. Traditional insurers like Allstate and Progressive were early adopters, and startups like Snapshot operate on an entirely UBI model. Another company — Columbus, Ohio-based Root Insurance — recently raised a $51 million series for policies with premiums calculated based on driver behavior. And the trend is likely to continue. Approximately 70 percent of all auto insurance carriers are expected to tap automotive telematics UBI by 2020, according to SMA Research, and Global Market Insights predicts that commercial use of UBI will grow by more than 18 percent in the next five years.
However, UBI in the autonomous car space is relatively novel. Like Avinew, Root offers a discount to Tesla drivers based on how many miles their vehicle is in Autopilot. Few other insurers do.
The reason is to an extent regulatory — not all states allow insurance companies to underwrite policies based on behavior and telemetry data. But lack of demand for autonomous safety features might also be to blame. A UBI study by LexisNexis Telematics found that among car shoppers, only 15 percent and 19 percent seek out advanced driver-assistance systems (ADAS) and connected car features, respectively.
That hasn’t given Michael Stankard, automotive practice leader at Aon, pause.
“The automotive industry is moving full-steam ahead with adding semi-autonomous and autonomous features to vehicles,” said Stankard. “As a result, the insurance industry is ripe for reinvention. There is a tremendous opportunity for insurers to embrace this technology and create new insurance programs that reward vehicle owners in the autonomous era.”
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