Those who activate assistance systems pay less

Munich. Markus Lienkamp has some experience translating automotive technology into motor vehicle policies. “A good 15 years ago we proved that the electronic stability program ESP reduces damage by a tenth and passed it on as an insurance discount,” says the head of the Chair for Vehicle Technology at the Technical University of Munich, looking down. behind.

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Read more after the announcement

Today the ties with the insurance industry are even closer. Together with the insurance giant Munich Re, its subsidiary Ergo and the technology consultancy Intech, he founded the service provider Mobility Technology Center (MTC) in Munich to develop electric cars.

Smart insurance for smart cars

“It’s about developing smart insurance for smart cars,” says Karsten Crede, CEO of Ergo Digital Ventures, of MTC’s goals. Today’s car insurance concepts would no longer work because modern cars no longer remain technologically virtually unchanged over their life cycle as they used to be. These days, they get more and more new features related to online security because their owner will eventually reserve them too. “But that changes the risk of the vehicle,” says Crede.

Read more after the announcement

Read more after the announcement

At the latest, when cars start to drive autonomously in large numbers, today’s insurance companies will come to an end. “The risk profile changes more and more from the driver to the performance of the technology”, explains the manager of ergo. In addition, cars are increasingly being shared or driven in a car-sharing manner. Motor vehicle policies would also have to adapt to these new concepts of ownership and use, which requires some technological know-how. “Today, the classic crash test is still the central analysis tool,” Crede says of the comparatively archaic present.

The two products MTC wants to start with and offer to insurers beyond the Munich Re Group are risk analysis for batteries in electric cars and for driver assistance systems, explains Intech boss Christian Wagner. “High-voltage batteries are the most expensive component in electric cars. For their insurance and residual value, it’s crucial how good they are after three years or how they age in the next few years,” he says. You cannot wait for empirical values, but instead have to predict aging processes using a cell testing laboratory.

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“In this way, we can simulate the entire life cycle of a vehicle,” says the expert. This can be very different for high voltage batteries. “There are vehicles that last 500,000 kilometers from the battery and there are those that break down at 160,000 kilometers,” says Lienkamp. Based on such findings, insurers may offer warranty policies for certain batteries for a second life after use in electric cars, which go beyond those of the manufacturer. Findings like this are also important for the used electric car market.

Selfish, ethical or standard algorithm?

The second core MTC product that Wagner explains aims to answer a crucial question from an insurance standpoint. “Which assistance function has which safety effect with which manufacturer and driver uses it?” Evaluating technology is one thing, the Intech co-founder emphasizes. But when an assistance system is deactivated, the best technology comes to naught.

Read more after the announcement

Read more after the announcement

“Anything that just beeps and chimes can be forgotten because the customer will eventually ignore it,” Lienkamp explains in another analysis finding specific to parking aids. To safely avoid parking damage, the system must activate the brake. Otherwise, cars with park assist would have higher insurance damages than those without, because bumpers with sensors are more expensive to repair.

When it comes to autonomous driving, the vehicle technology expert took a look at the near future. “We look at algorithms that are selfish, ethical, or programmed by today’s standards,” explains Lienkamp. It refers to how an autonomous vehicle reacts in the event of an accident that can no longer be avoided. Selfish means that damage to the vehicle the algorithm works on is minimized regardless of other losses, which can cost the life of a pedestrian. Ethical means that the overall damage to all potential participants in the accident is minimized and, above all, the weakest is protected.

MTC and car insurance a la carte

Insurance giant Munich Re and its subsidiary Ergo have a three-quarter stake in the Mobility Technology Center (MTC), which is scheduled to open in August. Intech and a consulting firm run by automotive engineering professor Markus Lienkamp hold the remaining shares. The services are open to auto insurers, including Ergo’s competitors. They are potential clients of the reinsurer Munich Re, which wants to secure an advantage on future motor vehicle policies. This also includes On Demand policies. They are insurance policies that can be contracted spontaneously over time and preferably with a click of the mouse, because modern cars are always online. An existing example of such insurance is a racetrack policy. If you want to put your private car on the subway there, you’re taking a risk that you can cover for this time with limited insurance. Foreign policies can also be activated spontaneously when crossing the border.

“In general, the ethical algorithm performs better in terms of overall damages,” Lienkamp says of the outcome of the simulations. The selfish algorithm is better for your own vehicle, but only minimally. Today’s standard algorithms are the worst variant in all respects and for everyone involved in the accident.

“Whoever wants to ensure autonomous driving must know what algorithm is being used,” clarifies the expert. This culminates in the vision of auto insurance that calculates largely automatically based on vehicle data. In such a world, vehicle owners would no longer fill out questionnaires for a car policy. “We want the car and its software to do this job,” says Crede.

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