Robots, Infrastructure, and Vehicle Subscriptions: Risks Insurers Should Monitor
Robotic technology, infrastructure investments, and vehicle subscriptions are becoming increasingly prevalent in today’s world, presenting both opportunities and risks. Insurers need to stay informed about these emerging trends as they continue to evolve.
The Rise of Robots and the Associated Risks
Robots have been a fascination for centuries, but their integration into various industries is happening today. With an estimated 3.4 million industrial robots currently in operation globally, their presence is rapidly increasing. While these robots offer advantages such as enhanced safety and productivity, they also pose risks.
Potential concerns include distraction for human workers, surgical errors, cyber data breaches, and property damage caused by moving robots. As the use of robots grows, insurers may face challenges in determining the cause of accidents involving robots, leading to potential claims involving bodily injury, property damage, and financial loss.
Homeowners insurers may also face unique issues related to robots. Household robots, designed for tasks such as vacuuming, mowing lawns, and cleaning pools, are gaining popularity. However, the proliferation of these devices raises concerns about security risks, as smaller household robots can be easily commandeered or loaded with malware. Additionally, robots powered by lithium-ion batteries may pose a fire hazard.
Infrastructure Investments and the Potential Side Effects
The United States’ recent focus on manufacturing and reshoring has led to increased infrastructure investments. The Bipartisan Infrastructure Act plans to invest $550 billion in various projects, including the improvement of transportation, manufacturing, energy, and construction sectors. While this opens up new business opportunities for insurers, it also raises concerns about potential supply chain strains and inflationary pressures.
Higher demand for construction materials and workers may lead to supply chain disruptions and delays in project completion. This was evident during the COVID-19 pandemic, where a surge in residential construction strained supply chains and drove up costs. Such demand-driven inflation may impact insurers, potentially leading to higher premiums and increased repair costs for features that policyholders may not even use.
Vehicle Subscriptions and Insurance Complexities
In the era of subscription-based services, automakers are now putting certain vehicle features behind paywalls. While this generates additional revenue for manufacturers, it introduces complexities for insurers. Even if owners choose not to pay for specific features, the hardware will likely still be included in the vehicles, resulting in increased overall costs and potentially higher insurance premiums.
Vehicle safety features, now available as subscription options, complicate matters further. Insurers often offer discounts for such features, but what happens if these safety features are only accessible through a subscription package that policyholders do not purchase or renew? This gap between expected safety features and their availability during accidents creates uncertainty for insurers when assessing risk and adjusting premiums accordingly.
Subscription-based services also create new opportunities for hackers to exploit software-enabled features. The wider the range of features accessible through subscriptions, the greater the potential attack surface for cybercriminals.
Adapting Insurance Practices in a Changing World
The world is evolving rapidly, with innovations like robots, infrastructure projects, and vehicle subscriptions becoming increasingly common. Insurers must adapt their pricing and risk management strategies to keep pace with these changes.
By closely monitoring the risks associated with robots, insurers can better assess liability in the event of accidents and claims. Considering the proliferation of home robots, homeowners insurers should be vigilant about potential security risks and fire hazards associated with these devices.
Infrastructure investments offer opportunities for insurers to expand their business while also necessitating careful consideration of supply chain strains and potential inflation. Insurers should be prepared for delays in project completion and increased costs resulting from high demand for materials and labor.
Vehicle subscriptions require insurers to navigate the complexities of providing coverage for features that policyholders may not even have access to or choose not to renew. Balancing customer expectations, pricing premiums accurately, and safeguarding against cyber threats are crucial considerations for insurers.
As insurers embrace these emerging trends, they must prioritize adaptability and stay ahead of the evolving risks. By doing so, insurers can effectively manage the changing landscape and continue to provide comprehensive coverage in an ever-changing world.
