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Technology on a tear

Area executives chime in on a future with driverless cars and drones.

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From the pages of In Business magazine.

Google those somewhat frightening words “driverless cars” and you’ll likely see a litany of intriguing headlines: “U.S. Secretary of Transportation: Driverless cars all over the world by 2025,” “Uber fleet to be driverless by 2030,” “Ford CEO expects fully autonomous cars by 2020,” “IEEE (Institute of Electrical and Electronics Engineers) predicts up to 75% of vehicles will be autonomous in 2040.”

Then there are drones, which are those “pilotless” contraptions that are expected to be one of the most popular gifts under the Christmas tree this year, with an estimated 700,000 sold in 2015 alone. With their ability to take photos and videos as they whiz near and far, unsuspecting consumers could soon become YouTube stars. Remember mom’s uncanny ability to have “eyes in the back of her head?” Multiply that by a million.

Rather than fear the inevitable, companies worldwide are learning, adapting, and believe it or not, preparing to help consumers through the electronic haze.

The insurance industry is one that many studies predict will be most affected by technological changes over the next several years.

“Exponential growth in technology is driving consumers’ expectations,” notes Ryan Rist, director of innovation at American Family Insurance. “Younger generations don’t want to call a taxicab company anymore and wait 20 minutes for a cab to show up.” Enter Uber, which he describes as a frictionless process of going from point A to point B. It’s quick, personalized, and relatively inexpensive. It also makes owning a vehicle less necessary.

Even George Jetson may not have foreseen the existing and emerging technologies quickly transforming life as earthlings once knew it. The question is how will businesses adjust?

To understand that, let’s first look at what’s going on out there.

Future stock

For those who ever thought insurance was “boring,” meet Rist, 37, who lives and breathes technology every day. “When we started looking at drones three years ago, people thought we were kind of crazy,” he admits. “Now, it’s all over.” The company has focused particular attention on driverless (autonomous) car technology, drones, and smart homes, and the effects each could have on the insurance industry.

“The future of autonomous cars is really about transportation,” Rist explains. “The Uber model, plus the self-driving car idea, is that we will no longer need to buy $20,000, $30,000, or $40,000 vehicles because we’ll be able to rent public transportation and customize it to our needs.”

Some predict auto insurance will become a thing of the past or be drastically reduced, he says, “because in the world of autonomous cars, there will be no crashes.” Worldwide, over a million people die on the roads annually. “We’ll think that was barbaric because we’ll now have cars that can sense and avoid that.”

Meanwhile, IEEE, in a survey of over 200 experts, predicted that rear view mirrors, horns, and emergency brakes will be removed from mass-produced cars by 2030, and that by 2035 cars will operate without steering wheels and gas pedals. Last year, Google announced that it would be building a fleet of cars without steering wheels.

Such innovations could signal the end for auto manufacturers as we know them, some say, only to be replaced by Tesla, Google, Apple, and Uber. “Those are the players that will be around because they’re really in tune to what the customers want and how they can deliver a better experience,” Rist says, adding that many believe these changes could occur within the next 10 years.

With timelines getting shorter, AmFam made the conscious decision years ago to proactively invest in the technology space. One area showing a lot of growth potential is smart-home technology, which is driven by consumer demand and uses sensor technology tied to smartphones. Smart homes include features like smart thermostats, smoke detectors, water sensors, coffee makers, and stoves — all of which can alert a homeowner of problems before they escalate, potentially reducing damage to property or worse.

One company AmFam has invested in has developed a connected doorbell, alerting homeowners when someone approaches their home. “About 70% of thefts start at the front door of your home, according to the FBI,” notes Rist.

If you think your mother had eyes in the back of her head, just wait until the photographic and video capabilities of drones become more prevalent.

Similarly, drones will become a positive insurance tool, Rist says, particularly when it comes to catastrophe response, because insurance agents are often among the last allowed in to inspect a site. The ability to send a drone to collect data and photos will allow insurers to respond more quickly to their customers.

From an adjuster standpoint, drones will also allow insurance companies to collect detailed information about properties without requiring adjusters to travel long distances, climb up on roofs, or go into areas that may not be particularly safe.

“We’re one of five companies that have successfully petitioned the FAA to get [an exemption] allowing us to use drones commercially,” Rist notes, admitting that implementation is still a ways out as systems are tested and validated.

“Technology is advancing faster than our ability to consume,” he says, “so we’re working on consumer adoption. Many people still don’t know these technologies exist.”

(Continued)

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