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MOBILITY Opinion piece

“As European, Japanese, US and other regulatory bodies consider the adoption of vehicles with automated features, how will the transportation-related industries spend their lobbying dollars?”

any increase in fatality rates nationally can be attributed to younger drivers. Also consider that vehicle ownership among ages 21 to 34 has recently declined by 25 per cent. Finally, we see vehicle downsizing among empty-nest boomers. Next, consider the national fleet of owned vehicles has

historically turned over every 8.5 years. That number is now just under 12 years, largely due to the economic conditions. However, this is creating pent-up demand. Vehicle manufac- turers are racing towards automated driving features, thus driving down the costs of these advanced features. One sen- sor that sold for US$60,000 36 months ago will be approxi- mately US$300 some 24 months from now. Once unleashed, this pent-up demand will result in an accelerated deploy- ment of crash prevention, crash avoidance, features. The Texas Transportation Research Institute published a study concluding a 24 per cent fleet penetration of forward colli- sion mitigation on roads with the highest congestion would eliminate stop-and-go congestion from low-speed crashes. From an actuarial perspective as well as fuel efficiency, these statistics point towards significant changes. The amount of money flowing through the crash econ-

omy will always trail the actual trends. The insurance indus- try reacts to changes in loss patterns. These companies are expected to make a profit as the majority are stock compa- nies and thus have a responsibility to the stockholders. The remaining few are either mutual companies owned by their customers, or privately held subsidiaries of larger organiza- tions. Of the top five companies holding roughly 70 per cent of the vehicle insurance market by units, only two models exist: those owned by stockholders and those owned by the actual customers.

A TIME FOR REVERSAL Every major industry associated with vehicle ownership and operations has grown on four simple premises that are now known to be unsustainable. 1 The population of those who can own a vehicle will grow, or at a minimum remain steady.

2 Those consumers capable of vehicle ownership will in fact own more than one vehicle.

3 Those who own vehicles will crash them at a rate of about 6 million reported and an estimated 10 million unreported incidents annually

4 As vehicles become more sophisticated, the cost of repair- ing them will continue to increase, as will healthcare costs for the 60 per cent to 70 per cent of those crashes resulting in an injury. (Severity)


The Centers for Disease Control have consistently labeled the vehicle fatality as a “preventable epidemic that is win- nable” beginning in 2008. Some will debate whether or not the costs of vehicle insurance will simply shift from indi- vidual policies to mega-commercial products as the level of autonomous capability increases. The reality remains, be it 5 years from now or 7 years from now, 85–90 per cent of today’s crashes will no longer occur. Some 12billion gallons of oil that is ever more expensive to produce will no longer be needed. As European, Japanese, US and other regulatory bodies consider the adoption of vehicles with automated fea- tures, how will the transportation-related industries spend their lobbying dollars? How will they price their product? What influence can they have on the rate of adoption? For example, if the insurance industry prices the “driver

in a box” as an inexperienced male driver, charging a signifi- cantly higher premiums (up to 300 per cent higher) from a standard adult driver, what kind of message regarding reli- ability in the system will that send to consumers? In short, the industries dependent upon the ownership and operation of vehicles are among the most wealthy., the most powerful, set of incumbents any new technology has ever faced: Insur- ance, Banking, Oil, Trial Lawyers. Will these industries embrace the saving of lives? They

must know some of the lives saved, injuries prevented, fami- lies not destroyed by grief, or health care costs, will be among their owners. Will they quietly, passively, resist the pace of adoption in the interest of hedging against the risk of declin- ing revenues that then negatively impacts stock prices? How will stockholders respond to declining revenues? These are tough ethical decisions facing transportation

related businesses at the FORTUNE 100 level. These are industries with a choice to fully embrace these technologies through pricing, through rewards programs, through their investment choices. Will they accelerate the decline in acci- dents? Will they voluntarily step up to accelerate the near elimination of the leading killer of young adults worldwide? With respect to the US economy, what are the peripheral effects when an industry of nearly US$400–500billion driven by ownership and crashes experiences declines in both? Questions facing regulators are equally difficult. Con-

sider for example, that the operating budgets for all 50 State Insurance Commissioners is largely funded via a premium tax. What is the potential impact upon their operating strat- egies with the potential of being among the most critical hubs of activity? Are the legal and TORT issues so complex that additional Federal intervention becomes a solution to Vol 8 No 3 North America

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