Glimpse of the future Insurance products
On April 6 2016, Daimler has let three of its autonomous trucks loose on the highway to complete a successful trip from Stuttgart to Rotterdam[i].
The ripples of such an achievement go beyond reducing congestion, cutting down CO2 levels and accidents caused by human error.[ii]
Combined with cryptocurrencies and #blockchain #technology, a new conceivable scenario will appear in the insurance industry were its products can be delivered based on new features through decentralized autonomous organizations – DAOs. Features that are designed to fit the autonomous economy we are heading for.
The DAO’s system consists of massive public ledgers that are able to communicate and transact with each other in a real-time mode. It will not only save the millions of dollars’ databases cost, but also reduce fraud to minimum. It can be built to attract 3rd party participants like insurance pool admins, sales, claim assessment, etc. and instead of working for an insurance company, members work for a piece of software!
Over the course of time, self-driving trucks will be practical reality with features that aid in lane shifts, parking, speed control, and highest safety rates for its occupants. We can expect accidents to occur due to harsh weather conditions and/or machine malfunctions. Hence the once dangerous and deliberate behaviors of humans such texting, reading, drinking, or even sleeping while driving are no longer be considered as “liability”.
Reducing all accidents and fatalities that arise from human error means fewer claims and that will tear down premium rating structure. DAOs can issue policies covering an autonomous vehicle with first-party coverage, paying for injury to the truck’s occupants or for the damage to the vehicle in case of an accident. Insurance premium can be relative to miles driven, and the “mode of driving” whether it was Autonomous or Manual – where Manual driving incurs much higher premiums. So tailgating a mini cooper carries very high risks that multiplies your premium by a hundreds.
Through algorithms built on top of the blockchain, policy holders have accounts tied to their #bitcoin wallets, in which premiums are deducted automatically in ratio to the miles driven. As long as bitcoins exist in the policyholder’s account, payments will be made and coverage exists. Low balances will be notified via the truck dashboard or any mobile phone, and the policyholder can terminate his policy any time with instant stopping of the open payment channel. The DAO is linked to the GPS systems of each autonomous truck and as soon as ON; they start reporting live data to the blockchain.
Oracles can feed the blockchain with information on miles driven, mode of operation, the make and model of the truck, weather statuses, and other considerable live data, of course including the occupants encrypted medical files and personal info. Accordingly, then a premium is set and its gets paid automatically.
Autonomous trucks are able to continuously monitor roads with a broad range of sensors like visible and infrared light, including ultrasound, with a nearly 360-degree field of view![iii]
The algorithm can gather the logs to determine which parts of the vehicle were damaged, and simultaneously compares price data for all replacement parts, order them from the factory, send a mechanic to the garage, and pay for all costs incurred. Therefore, the policyholder is guaranteed coverage on the truck for full replacement cost.
In addition, Algorithms can also distinguish between the truck movement characteristic in a genuine accident and staged one. If the movement of the truck coincides with previous Manual driving patterns related to fraud, the algorithm will simply deny claim.
High premiums are planned to discourage the engagement of Manual Mode, except in emergencies. So enjoying the thrill of Manual driving, could be felt on designated driving tracks were race truck shows are held. Arena insurance companies provide reduced coverage for Manual operation, as long as the truck is only driven on the track.
As the data transmission enables the DAO to identify the amount of damage to the truck, different information can help in accurately paying body injury claims.
Upon physical harm, the nature of the injury and the cost of the recovery can be reported on the medical blockchain, that also verifies the license of the Doctor who’s attending the injured person. Payments from DAO can be deposited directly into the Doctor’s bitcoin wallet.
We all envision autonomous trucks to operate on major highway corridors, yet insurance policies that fits this industry are key in welcoming them. Autonomous trucks will require Autonomous insurance – best delivered through a decentralized autonomous organization.
[i] http://www.gizmag.com/daimler-connected-autonomous-trucks-challenge/42631/
[ii] http://www.cato.org/publications/policy-analysis/policy-implications-autonomous-vehicles
[iii] http://insurancethoughtleadership.com/tag/autonomy/
[linkedinbadge URL=”https://nl.linkedin.com/in/tey-el-rjula-50b59242″ connections=”off” mode=”icon” liname=”Tey El-Rjula”], is corporate trainer on Digital Currencies and Blockchain and this article was originally published on linkedin
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