Forget Driverless Cars: Vehicle Safety Tech is Changing Insurance Today

Personal automobile insurance is one of the most well-known forms of insurance in the U.S. as it is mandatory in most states. In 2012, personal automobile insurance premium volume was $174 billion, accounting for 35% of all property and casualty premiums. Commercial auto premium volume was $25 billion for a total of $199 billion spent on automobile insurance.

Technology is disrupting many different industries -- including insurance. Vehicle safety technology is improving and is having a dramatic impact on reducing the number and severity of vehicle accidents. As vehicle safety technology improves, accidents are decreasing. When accidents decrease, claims will decrease and premiums inevitably will fall.

Vehicle Safety Technology is Improving

Following is a list of some of the technologies that are being added to vehicles that improve vehicle's ability to avoid an accident and improve the safety of passengers:

Tire-pressure monitoring

Sensors at the wheels are able to alert you if the air pressure is too low by an audible warning, a light on the instrument panel, or both. We are also seeing more vehicles with run-flat tires that allow a vehicle to continue to run at a relatively high rate of speed for 50-plus miles.

Collision mitigation

Modern cruise control goes beyond just maintaining a constant speed. The use of radar, sensors and cruise control automatically adjust the throttle and brakes to keep a safe distance from the vehicle in front of it in case there are changes in traffic speed or if a slower vehicle cuts in. If the system senses a potential collision, it typically will brake hard and tighten the seat belts. Once it knows the lane is clear or traffic has sped up, it will return your car to its original cruising speed, automatically.

Blind-spot detection

This technology alerts the car owners about the cars or objects that are in the driver’s blind spot while driving or parking, or both. Usually it will respond when the signal is turned on; if it detects something in the way, it may flash a light in the mirror, causing the seat or steering wheel to vibrate or sound an alarm. This is more of a short-range detection system.

Lane-departure warning

This is similar to blind-spot technology but with more range. It judges an approaching vehicle's speed and distance and warns about the potential danger if the driver changes lanes. It can also warn if it determines the car is wandering out of the lane, which could be useful if the driver becomes distracted. The warning could come in the form of a vibration through the seat or steering wheel, or an audible or visual alarm.

Rollover prevention

If the system senses a potential rollover, it will apply the brakes and modulate throttle as needed to help the driver maintain control.

Dual-stage airbags

Airbags can now sense the different sizes and weights of occupants as well as seat belt usage, abnormal seating position (such as reaching for the radio or bending to pick something off the floor), rear-facing child seats and even vehicle speed. While driver, passenger and side curtain airbags are nothing new, sensing airbags are popping up (so to speak) everywhere.

Emergency brake assist

This brake technology is different from an anti-lock braking system or electronic brake force distribution in that it recognizes when the driver makes a panic stop (a quick shift from gas to brake pedal) and will apply additional brake pressure to help shorten the stopping distance.

Night-vision assist

Night vision is provided in different forms, such as infrared headlamps or thermal-imaging cameras. An image is generated through a cockpit display, brightening the objects that are hard to see with the naked eye. Adaptive headlights follow the direction of the vehicle. They may also be speed-sensitive or compensate for ambient light.

Rearview camera

Rearview cameras not only protect your car, but also protect children and animals from accidental back-overs.

Other emergency response systems

An Enhanced Accident Response System (EARS) turns on interior lights, unlocks doors and shuts off fuel when airbags deploy, while Volkswagen's system also switches on the hazards and disconnects the battery terminal from the alternator. In addition, a few cars alert their respective response centers of the accident and make crash details available to emergency personnel.

The Cost of Vehicle Accidents

Motor vehicle crashes are one of the leading causes of death in the U.S. More than 2.3 million adult drivers and passengers were treated in emergency departments as the result of being injured in motor vehicle crashes. In 2012 there were more deaths from vehicle crashes — not only for teens but also for the adults — than at any time in the past.

The top reasons for vehicle accident fatalities for teens aged 16 to 19 is listed below.

• Unsafe speed ...............35.3%
• Right-of-way .................20.6%
• Improper turns ..............14.8%
• Signal/sign ......................8.1%
• Alcohol/drugs ..................5.1%
• Passing/Lane change .....4.3%
• Wrong side of road .........3.1%
• Other ...............................8.7%

Less Accidents = Less Premiums

The vehicle safety technologies we listed at the beginning of this article are already having an effect on the number and severity of vehicle accidents.

The Mercedes I was given as a rental vehicle just last week had the tire pressure indicator as described above. I was also surprised to receive a warning on the dashboard about two hours into my drive that it was time to take a rest break.

I am not sure if this alert was based on the amount of time behind the wheel or some indication that I might have been nodding off. But, the warning did get my attention and I sat up a little straighter and paid a little more attention to the road. Various automobile manufacturers are in a race to develop the safest possible car. This will ultimately culminate in some type of self-driving autonomous vehicle in the not too distant future.

The vehicle safety technology improvements described in this article, as well as other improvements under development we don’t even know about yet, are dramatically reducing the number and severity of vehicle accidents. As claim costs drop, premium expenses will inevitably follow. This will put pressure on the insurance industry to adapt to this changing environment.

What has been your experience with vehicle safety technology? What do you like or not like about the developments you see?

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Steve Anderson is an authority on insurance technology. He is a prolific writer and frequent speaker known for his knack for translating “geek speak” into easily understood concepts. Check out his free weekly newsletter “TechTips” and other resources on his website.

Photo: AutoShopper.com