To Keep Up With Ride-Sharing, Insurers Must Confront Self-Driving Cars

Insurance carriers have been quick to adopt ride-sharing, with all of the top five U.S. private auto writers now offering coverage. But as the ride-sharing industry continues to evolve, it looks as though insurers will have to embrace autonomous vehicles if they want to keep up.

On the ride-sharing front, Erie Indemnity Co. was an early mover, announcing in November 2014 that it launched what it believed to be the first coverage of its kind. On the flip side, State Farm Mutual Automobile Insurance Co. held off longer than many of its peers. As late as September 2015, when S&P Global Market Intelligence published a report on the topic, State Farm was still not participating. But that has since changed, with the personal lines giant now offering endorsements in several states.

Information on ride-sharing programs is easy to find in rate filings submitted to regulators. Plans for coverage of self-driving vehicles, however, are harder to come by. ACUITY A Mutual Insurance Co. is one of the exceptions. The insurer includes a vehicle technology factor in certain rate filings, which it said will remain neutral until the devices become more prevalent.

EMCASCO Insurance Co. and New York Marine & General Insurance Co. also have made some headway. EMCASCO, a unit of Employers Mutual Casualty Co., includes a question in its commercial auto policy on whether any autonomous vehicles or platooning vehicles are used. Platooning refers to a situation in which cars can link together, similar to a train, and be led by a human-operated vehicle in front. New York Marine, a unit of ProSight Equity Management Inc., included definitions for autonomous vehicles in a commercial auto filing submitted to Maine regulators in May. These definitions were based on categories from the National Highway Traffic Safety Administration.

Levels of vehicle automation as defined by National Highway Traffic Safety Administration

The largest U.S. private auto writer, State Farm, also appears to be interested in self-driving cars. In December 2013, Ford announced that it had developed an automated hybrid research vehicle in conjunction with the University of Michigan and State Farm.

The ride-sharing companies are keen not only to use the automated vehicle technology, but also to develop it. Uber, which formed an Advanced Technologies Center a few years ago, announced May 19 that its self-driving car is about to hit the road — but not accepting passengers just yet. It will be collecting mapping data and testing its capabilities on the streets of Pittsburgh, where the center is based. Meanwhile, Google has made headlines for its entry into the ride-sharing realm via its Waze subsidiary. While Waze is currently a traffic and navigation app, it has launched a pilot program in the Bay Area for a carpooling service.

Insurers have already been tackling some of the lower levels of vehicle automation. For example, a rate filing submitted by AIG Property Casualty Co. to Texas regulators in December 2015 mentions discounts for a number of advanced safety features, including lane departure monitoring, automatic braking and blind-spot monitoring. American International Group Inc. is just one of many insurers that provide these types of discounts.

For James River Group Holdings Ltd., Progressive Corp. and Zurich Insurance Group Ltd., it would seem to be particularly important to keep pace with ride-sharing technology. These are the insurers that provide the coverage offered by Uber and Lyft to its drivers. The policies offer liability coverage as soon as the app is turned on, and then offer additional coverage, including uninsured motorist and contingent collision, once the driver has been matched with a rider. James River Insurance Co. offers these policies for Uber drivers in the majority of the U.S.; a notable exception, however, is Texas, where Progressive subsidiary United Financial Casualty Co. is the provider. Subsidiaries of Zurich, primarily Steadfast Insurance Co., offer these types of policies to Lyft drivers.

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