by Alain L. Kornhauser, Ph.D. Professor, Operations Research & Financial Engineering Director, Program in Transportation Faculty Chair, PAVE (Princeton Autonomous Vehicle Engineering) Princeton University Presented at State Insurance Trade Association 2013 Annual Meeting Las Vegas, NV October 21, 2013 Smart Driving Cars Financially Attractive to the Insurer and Insuree
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by Alain L. Kornhauser, Ph.D. Professor, Operations Research & Financial Engineering Director, Program in Transportation
Smart Driving Cars Financially Attractive to the Insurer and Insuree. by Alain L. Kornhauser, Ph.D. Professor, Operations Research & Financial Engineering Director, Program in Transportation Faculty Chair, PAVE (Princeton Autonomous Vehicle Engineering) Princeton University Presented at - PowerPoint PPT Presentation
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by
Alain L. Kornhauser, Ph.D.Professor, Operations Research & Financial Engineering
Director, Program in Transportation Faculty Chair, PAVE (Princeton Autonomous Vehicle Engineering)
Princeton University
Presented at
State Insurance Trade Association 2013 Annual Meeting
Las Vegas, NVOctober 21, 2013
Smart Driving CarsFinancially Attractive to the Insurer and Insuree
Outline
• Today’s Automobile: Its Mobility & Liabilities• Addressing the Liabilities:
– Moderating Behavior– Mitigating Crashes– Avoiding Crashes through automation/SmartDrivingCars
• What is the vision• Where are we now• How insurance gets us there.
Preliminary Statement of Policy Concerning Automated Vehicles
Level 0 (No automation)The human is in complete and sole control of safety-critical functions (brake, throttle, steering) at all times. Level 1 (Function-specific automation) The human has complete authority, but cedes limited control of certain functions to the vehicle in certain normal driving or crash imminent situations. Example: electronic stability control Level 2 (Combined function automation) Automation of at least two control functions designed to work in harmony (e.g., adaptive cruise control and lane centering) in certain driving situations. Enables hands-off-wheel and foot-off-pedal operation. Driver still responsible for monitoring and safe operation and expected to be available at all times to resume control of the vehicle. Example: adaptive cruise control in conjunction with lane centeringLevel 3 (Limited self-driving) Vehicle controls all safety functions under certain traffic and environmental conditions. Human can cede monitoring authority to vehicle, which must alert driver if conditions require transition to driver control. Driver expected to be available for occasional control. Example: Google carLevel 4 (Full self-driving automation) Vehicle controls all safety functions and monitors conditions for the entire trip. The human provides destination or navigation input but is not expected to be available for control during the trip. Vehicle may operate while unoccupied. Responsibility for safe operation rests solely on the automated system
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Extending its vehicle safety standards from Crash Mitigation to Crash Avoidance with Aim at Full Self-Driving Automation
Level 4 (Driverless Opportunity) : Efficiency, Equity Revolutionizes “Mass Transit” by enabling the
provision of mobility without incurring a Labor Cost
Primarily a Fleet Play
Where Are We with Automation/SmartDrivingCars?
• GM Futurama @ 1939 World’s Fair
• Zworykin & Flory @ RCA-Sarnoff in Princeton, Late 50s** VK Zworykin & L Flory “Electronic Control of Motor Vehicles on Highways” Proc. 37th Annual Mtg Highway Research Board, 1958
Cruise Control (1958)1945 Invented by Ralph Teetor1958 Chrysler Imperial 1st intorductionGM first offered on the 1959 model year Cadillac.
$25/yr for Flo or the Gecko or ??? To enhance “Combined Ratio”
Could Discount Finance:
Assume: Emergence of “Price Leaders”
Expected Implications of “Google Cars”
??
May well Deliver 2/3rds the safety of Google Car
$300/yr to Mercedes
$20/yr for Flo or the Gecko
Could “Pass-through” FinanceMercedes Intelligent Drive??
(Available in ‘14 S-Class)
$475 Pass-through becomes: $320
Therefore: I get Intelligent Drive for Free (thank you Google) !! Plus: • Prob. of my car killing me is reduced factor: 2/3*.81= 0.54 (half)• Prob. of my car injuring me is reduced factor: 2/3*.65= 0.44• I “Save” my expected “deductible self-insurance”: 2/3*$247 = $165/yr• I have more Comfort• I have more Convenience• I have “Anxiety” reliefWhat a great Business Case! I’m a Buyer!
With Mercedes as the Market Leader offering “Level 2-” SmartDriving Technology at an incremental price tag that can be absorbed by a “Price Leading” Insurance Company, should lead to:
• Viral adoption by the car buying public
• “Moore’s Law type of price/performance improvement
• Market-driven Transition to “Level 2” and “Level 3” at same or even lower price structure
• Adoption and enhancement rates that are comparable to that enjoyed by airbags may be likely
Expected Implications…
• Other automakers will be enticed to follow (race seems to have already started)