Sep 6, 2017

Autonomous Vehicles & the Evolving Business Landscape

According to the Insurance Institute for Highway Safety, there could be 3.5 million self-driving vehicles on the road by 2025. This outlook isn’t surprising considering large automakers like Volvo, Audi, Tesla and even Cadillac announced plans in 2017 to begin testing this type of technology. As advancements in autonomous vehicle (AV) technology continue to gain momentum, the commercial impact is inevitable.

In 2016, Uber announced its self-driving commercial truck made its first delivery and most recently, Domino’s and Ford publicized a partnership to test autonomous pizza delivery cars. There’s no denying that the auto industry is changing. However, a complete market conversion is unlikely to happen overnight – but rather through incremental advancements. As the use of AV technology in the commercial sector evolves, manufacturing and distribution companies will need to prepare and adapt.

Amid the uncertainty, companies can take several steps to proactively evaluate their business strategy and begin preparing their operations:

    1. Refine overall corporate strategy. The organization first needs to consider what autonomous vehicles will mean for their specific operation – analyzing both weaknesses and strengths. Because this advanced technology will need to be layered into a business’ infrastructure over time, organization executives should develop an implementation timeline to include their immediate, short term, and long term goals.


    1. Prepare to incorporate technology into the supply chain. The next step for many manufacturing and distribution companies is to begin considering how to integrate these advancements into their supply chain. Telematics systems can be incorporated into fleets first to analyze relevant data like driving patterns and servicing and maintenance upkeep schedules. While we naturally associate autonomous technology with self-driving cars on the road, this technology is also impacting logistics as a whole. For example, auto pallet movers and autonomous loading could transform traditional warehouse operations.


    1. Identify new opportunities and threats. While autonomous technology has many safety benefits like collision avoidance systems and vehicle-to-vehicle communication capabilities that can reduce the likelihood of an accident for distribution fleets, this technology will also create new liabilities for the organization. For instance, self-driving fleets will be reliant on complex software, which could create a large exposure if the vehicle is hacked by cybercriminals. Organizations need to make sure cybersecurity and data management are a top priority.


  1. Contractual risk transfer. As advanced autonomous technology grows in popularity, one of the primary concerns for both businesses and insurers is identifying accountability in the event of an accident. For example, if a self-driving commercial truck causes a collision, which organization is responsible – the operating company, the truck manufacturer, or the automation software company? As a legal strategy, manufacturing and distribution companies can utilize contractual risk transfer to limit their liability.

As autonomous technology enters the marketplace, lawsuits and court rulings throughout the country will undoubtedly shape legal responsibility. Businesses must understand emerging government regulations and insurance standards. Organization executives should consult their insurance broker to make sure that they are compliant with all evolving regulations and to evaluate both the potential opportunities and threats facing their operation. By working to develop a proactive risk management strategy, companies can identify exposures and reduce risk, to better protect their employees, property, equipment and balance sheet.[whitepaper-washkalavitch]


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