Tomorrow Today Safe-Driving Technologies of Tomorrow, Here Today

Tomorrow Today Safe-Driving Technologies of Tomorrow, Here Today Co-Sponsored by the CPCU Personal Lines Interest Group & the Information Technology Interest Group

Learning Objectives Learn about technologies that are changing the driving experience from assisting drivers to eliminating the need for them altogether Explore regulatory and insurance industry changes and challenges resulting from these new capabilities Further meet customer expectations by gaining perspective from a panel of experts on adopting and using new technologies

Agenda Opening Remarks Need Section/Presentation Title Kim Hazelbaker Senior Vice President, Highway Loss Data Institute Autonomous Vehicles in California Bernard C. Soriano, PhD Deputy Director, California DMV Issues Raised by Autonomous Cars Patrick B. Woods, FCAS, MAAA Assistant Vice President & Actuary, Personal Automobile Actuarial, ISO Insurance Programs and Analytic Services Open Forum

Crash Avoidance Technologies Kim Hazelbaker Senior Vice President, Highway Loss Data Institute

The Insurance Institute for Highway Safety Founded in 1959 An independent, nonprofit, scientific, and educational organization Dedicated to reducing the losses deaths, injuries, and property damage from crashes on the nation's highways The Highway Loss Data Institute Founded in 1972 Shares and supports this mission through scientific studies of insurance data and by publishing insurance loss results by vehicle make and model. Both organizations are wholly supported by auto insurers.

Member groups Acceptance Insurance ACE Private Risk Services Affirmative Insurance Alfa Alliance Insurance Corporation Alfa Insurance Allstate Insurance Group American Family Mutual Insurance American National Property and Casualty Company Ameriprise Auto & Home Amica Mutual Insurance Company Auto Club Enterprises Auto Club Group Auto-Owners Insurance Aviva Insurance Bankers Insurance Group Bituminous Insurance Companies California Casualty Group California State Auto Group Capital Insurance Group Chubb & Son Colorado Farm Bureau Mutual Insurance Company Commonwealth Mutual Insurance Company of America Concord Group Insurance Companies COUNTRY Financial CSAA Insurance Group CSE Insurance Group Direct General Corporation Erie Insurance Group Esurance Farm Bureau Financial Services Farm Bureau Insurance of Michigan Farm Bureau Mutual Insurance Company of Idaho Farmers Insurance Group of Companies Farmers Mutual Hail Insurance Company of Iowa Farmers Mutual of Nebraska Florida Farm Bureau Insurance Companies Frankenmuth Insurance Freestone Insurance Company Gainsco Insurance GEICO Group The General Insurance Georgia Farm Bureau Mutual Insurance Company Goodville Mutual Casualty Company Grange Insurance Hallmark Insurance Company Hanover Insurance Group The Hartford Haulers Insurance Company, Inc. Horace Mann Insurance Companies ICW Group Imperial Fire & Casualty Insurance Company Indiana Farmers Mutual Insurance Company Infinity Property & Casualty Kemper Preferred Kentucky Farm Bureau Insurance Liberty Mutual Insurance Company Louisiana Farm Bureau Mutual Insurance Company Maryland Automobile Insurance Fund Mercury Insurance Group MetLife Auto & Home Michigan Millers Mutual Insurance Company MiddleOak Mississippi Farm Bureau Casualty Insurance Company MMG Insurance Mutual of Enumclaw Insurance Company Nationwide New Jersey Manufacturers Insurance Group Nodak Mutual Insurance Company Norfolk & Dedham Group North Carolina Farm Bureau Mutual Insurance Company Northern Neck Insurance Company Ohio Mutual Insurance Group Old American County Mutual Fire Insurance Old American Indemnity Company Oregon Mutual Insurance Pekin Insurance PEMCO Insurance Plymouth Rock Assurance Progressive Corporation QBE The Responsive Auto Insurance Company Rockingham Group Safe Auto Insurance Safeco Insurance Samsung Fire & Marine Insurance Company SECURA Insurance Sentry Insurance Shelter Insurance Sompo Japan Insurance Company of America South Carolina Farm Bureau Mutual Insurance Company Southern Farm Bureau Casualty Insurance Company State Auto Insurance Companies State Farm Tennessee Farmers Mutual Insurance Company Texas Farm Bureau Insurance Companies Tower Group Companies The Travelers Companies United Educators USAA Utica National Insurance Group Virginia Farm Bureau Mutual Insurance West Bend Mutual Insurance Company Western National Westfield Insurance XL Group plc Zurich North America

50 th Anniversary

Forty Mile per Hour Frontal Offset Crash Test 1959 Chevrolet Bel Air and 2009 Chevrolet Malibu

Size of HLDI Passenger Vehicle Database Number of unique VINs in files, September 2014 Model Year Number of Vehicles 2005 16,045,166 2006 15,097,690 2007 14,819,925 2008 13,089,841 2009 8,559,498 2010 9,847,982 2011 10,358,232 2012 11,062,716 2013 11,253,485 2014 7,225,990 Total 117,360,525

Crash Avoidance Systems

Driver assistance features Radar, LIDAR, ultrasonic, infrared, cameras, GPS

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PDL Claim Frequencies for 2010-12 Volvo XC60 With City Safety vs. Other 2009-12 Midsize Luxury SUVs 10 Calendar years 2009-12 8 6 4 2 0

Volvo XC60 City Safety Updated Results Vs. Other Midsize Luxury SUVs Property damage liability Claim Frequency Claim Severity Overall Losses -16.0% -14.6% -13.1% -$89 -$42 $4 -$17 -$15 -$12 Bodily injury -37.6% -33.3% -28.7% Collision -21.1% -20.2% -19.3% -$512 -$450 -$389 -$98 -$92 -$86 Vs. Other Volvos Property damage liability Claim Frequency Bodily injury -41.5% -33.7% Claim Severity Overall Losses -8.3% -5.2% -1.9% $206 $291 $373 $0 $4 $7-25.0% Collision -13.3% -11.4% -9.3% -$261 -$148 -$38 -$50 -$40 -$30

Collision Avoidance Technology Acura Adaptive headlights, collision mitigation braking system (forward collision warning with auto brake and adaptive cruise control) (blind spot warning) Buick Infiniti Lane departure warning, rear park assist Adaptive headlights, adaptive cruise control, adaptive cruise control with full stop, around view monitor, brake assist, lane departure warning, lane departure prevention, rear camera (advance brake assist, low speed follow, forward collision warning with auto brake)

Collision Avoidance Technology Mazda Mercedes Benz Volvo Adaptive headlights, blind spot warning, rear camera Adaptive headlights, adaptive head beam assist, attention assist, active blind spot assist, blind spot warning, distronic, DistronicPlus PreSafe brake, lane departure warning, night view assist, night view assist with pedestrian protection, ParkTronic, rear camera (Distronic Plus, lane departure prevention, park assist, park guidance) Adaptive headlights, blind spot warning, park assist, rear camera (adaptive cruise control, lane departure warning, forward collision warning with auto brake)

Collision Avoidance Research Project Methods Covariates Calendar year, vehicle series and model year, rated driver age, rated driver gender, rated driver marital status, rated driver risk, state, registered vehicle density Model years 2000-11 Calendar years 1999-2011 Modeling approach Only vehicles with features included, each feature treated as a variable, model run for each coverage type for frequency and severity

Forward Collision Warning

Property Damage Liability Losses for Forward Collision Warning With Feature vs. Without Mercedes with adaptive cruise control Volvo with adaptive cruise control Claim Frequency Claim Severity Overall Losses -12.0% -7.1% -1.9% -$100 $58 $225 -$10 -$4 $2-21.9% -7.1% 10.6% -$201 $266 $821 -$18 $2 $27

Forward Collision Warning With Auto Brake

Property Damage Liability Losses for Forward Collision Warning With Auto Brake With Feature vs. Without Acura with adaptive cruise control Mercedes with adaptive cruise control Volvo with lane departure warning & driver alert Claim Frequency Claim Severity Overall Losses -25.9% -14.2% -0.6% -$323 $69 $523 -$24 -$10 $7-23.3% -14.3% -4.2% -$191 $126 $479 -$19 -$8 $4-25.1% -10.0% 8.2% -$501 -$83 $415 -$29 -$11 $11

Adaptive Headlights

Collision Losses for Adaptive Headlights With Feature vs. Without Claim Frequency Claim Severity Overall Losses Acura -11.9% -2.0% 9.0% -$466 $12 $556 -$40 -$4 $38 Mazda -12.0% -6.4% -0.6% -$132 $126 $403 -$33 -$9 $17 Mercedes -1.9% -0.1% 1.8% $628 $758 $891 $42 $54 $67 Volvo -4.2% -0.7% 2.9% -$28 $149 $333 -$7 $8 $24

Property Damage Liability Losses for Adaptive Headlights With Feature vs. Without Claim Frequency Claim Severity Overall Losses Acura -20.3% -6.3% 10.3% -$418 -$9 $473 -$20 -$5 $14 Mazda -18.3% -10.1% -1.2% -$574 -$381 -$170 -$33 -$23 -$12 Mercedes -12.7% -10.0% -7.2% $21 $112 $207 -$8 -$5 -$2 Volvo -13.4% -9.0% -4.4% -$152 -$29 $101 -$14 -$9 -$3

Lane Departure Warning

Collision Losses for Lane Departure Warning With Feature vs. Without Buick with side view assist Claim Frequency Claim Severity Overall Losses -1.1% 4.2% 9.7% -$212 -$34 $154 -$10 $6 $24 Mercedes -8.5% 5.6% 22.0% $3 $1,010 $2,199 $1 $99 $222 Volvo with forward collision with auto brake & driver alert -13.8% -2.9% 9.3% -$700 -$179 $417 -$62 -$19 $32

Property Damage Liability Losses for Lane Departure Warning With Feature vs. Without Buick with side view assist Claim Frequency Claim Severity Overall Losses -1.3% 7.2% 16.4% -$138 $46 $247 -$2 $6 $15 Mercedes -14.6% 10.9% 43.9% -$548 $150 $1,057 -$16 $13 $55 Volvo with forward collision with auto brake & driver alert -25.1% -10.0% 8.2% -$501 -$83 $415 -$29 -$11 $11

Availability of Features for Automobiles

New Vehicle Series With Electronic Stability Control By model year 100% 80% 60% 40% 20% 0% 1995 1997 1999 2001 2003 2005 2007 2009 2011 standard optional not available

Registered Vehicles With Electronic Stability Control By calendar year 100% 80% 60% 40% 20% 0% 1995 1997 1999 2001 2003 2005 2007 2009 2011 standard optional not available

Registered Vehicles With Electronic Stability Control, Actual and Predicted By calendar year 100% 80% 60% 40% 20% actual predicted previous predicted 0% 1995 2000 2010 2020 2030 2040 2050

Calendar Year Features Reach 95 Percent of Registered Vehicle Fleet With and Without Mandate 2050 2040 without mandate 2015 mandate 2030 2020 forward collision warning rear parking sensors lane departure warning adaptive headlights blind spot warning rear camera

First public release of IIHS crash avoidance ratings September 27, 2013

Autobrake Performance Tests 25 km/h Subaru Outback with EyeSight Mercedes-Benz E350 with Distronic Plus

Testing Benefits of Autobrake 25 mph 12 mph

761 Broadcasts Attracted 60 Million Viewers

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Google s Driverless Car

Autonomous Vehicles in California Bernard C. Soriano, PhD Deputy Director, California DMV

California at a glance Approximately 38 million people Over 25 million driver licenses and identification cards Over 32 million actively registered vehicles Over 73 percent commute to work alone Over 172 thousand public road miles Over 323 billion vehicle miles travelled per year Variety of terrain and weather conditions

California Legislation Senate Bill 1298 As soon as practicable, but no later than Jan. 1, 2015, DMV must adopt regulations setting forth requirements for: Manufacturers testing of autonomous vehicles on public roadways Operation of autonomous vehicles on public roadways

Public workshops and meetings Nissan Volvo VW Group Chrysler GM Toyota Honda Google Bosch Autonomous vehicle technology advancing quickly Adoption by the public will not be dependent on technology Human factors (HMI) Potential traffic safety improvements are immense Over 30,000 traffic fatalities per year Almost all (95 percent) of traffic fatalities were the result of human error In over 35 percent of traffic fatalities, the brakes were not applied Government and industry need to work collaboratively

Definition of Autonomous NHTSA defines 4 levels of autonomous vehicles Level 0 No automation Level 1 Function specific automation Level 2 Combined function automation Level 3 Limited self-driving automation Level 4 Full self-driving automation Society of Automotive Engineers (SAE) has similar definitions, although 5 levels

Examples

Examples, continued

Philosophical differences Driver is essential to vehicle operations Design systems to maintain situational awareness Adequate notification time Human is the backup system Vehicle operations fully autonomous No need for steering or braking controls Redundancy and fail-safe built into system

Technological differences Self-contained processing Map dependency and cloud computing Vehicle to vehicle communication (v2v) NHTSA decision on DSRC capability Vehicle to infrastructure communication (v2i) Other forms of autonomous vehicles Platooning Low speed shuttles

NHTSA Level 2 autonomous vehicles available now now _ 2014 Mercedes S class 2014 BMW i3, 5-Series 2014 Cadillac XTS NHTSA Level 3 autonomous vehicles being tested now Private test tracks Human reaction testing Situational awareness No industry agreement on NHTSA Level 4 timetable Dependence on DSRC? Self-parking

Volvo No fatalities in a Volvo vehicle by the year 2020 Collision avoidance systems Commercial trucking industry Road train or platooning Gothenburg, Sweden Nissan Autonomous car will be available for sale before 2020 Price will be $1,000 - $2,000 above current prices Audi A-7 demo at the 2013 CES

Volvo No fatalities in a Volvo vehicle by the year 2020 Collision avoidance systems Commercial trucking industry Road train or platooning Gothenburg, Sweden Nissan Autonomous car will be available for sale before 2020 Price will be $1,000 - $2,000 above current prices Audi A-7 demo at the 2013 CES

Challenges Definition Safety Liability Privacy Security Licensing Reliability Infrastructure Usage Vehicle Code Visibility Standardization Insurance Technical constraints Messaging Public perception

Statewide Steering Committee California State Transportation Agency California Department of Insurance California Highway Patrol California Office of Traffic Safety California Department of Transportation California Department of Motor Vehicles National Highway Traffic Safety Administration

Regulatory Package 1: Manufacturers Testing Two pre-notice workshops 45-day public comment period Formal public hearing 15-day public comment period Regulations approved and adopted in May 2014 Effective on September 16, 2014

Testing Regulations Summary $5 million in insurance, bond, or self-insurance Test drivers: no DUI, not an at-fault driver, and no more than 1 point Successful completion of test driver training program Employee, contractor, or designee Seated in driver seat during testing Report any accident within 10 days Report unanticipated disengagement of autonomous technology Testing permit valid for one year Vehicles excluded from testing: Commercial vehicles > 10,000 lbs GVW Motorcycles

Regulatory Package 2: Operation on California Public Roadways Contract with UC Berkeley for recommendations March 11 pre-notice workshop Available for 45-day public comment period shortly Formal public hearing Assignment of violations Definition of operator Operational and deployment restrictions Operator license requirements Other feasible regulations Target date of December 2014

Operational Regulations Summary (DRAFT) Expected to be available for public comment in July Public hearing after 45 days Specify whether vehicle is capable of operating without a driver inside Disclose the designed areas of operation Submission of data from testing program Functional safety Sensor data recorded 30 sec prior to collision Disclosure of recorded data not necessary for safe operation of vehicle $5 million in bond, or self-insurance NHTSA Level 4 vehicles issued distinct special license plate No special driver license requirement

Outreach Efforts Meetings with manufacturers, suppliers, and industry Presentations to government and interested parties Social media LinkedIn group Reddit discussion Facebook, Twitter, and YouTube DMV website and blog Traditional media Industry meetings Working groups across jurisdictions

Questions bernard.soriano@dmv.ca.gov (916) 657-7626 @Bernard45

Issues Raised by Autonomous Cars Patrick B. Woods, FCAS, MAAA Assistant Vice President & Actuary, Personal Automobile Actuarial ISO Insurance Programs and Analytic Services

Environmental Issues Cost of technology and infrastructure Interaction with existing vehicles on road Legal environment for autonomous cars and licensing Who owns data Safety and Security

Insurance Issues What is being insured? Rating/Underwriting Claims Settlement Safety

Liability Insurance Today Liability based on your actions How you manage conditions How attentive you are How you maintain your vehicle Proximate cause of accidents Other drivers actions

Rating/Underwriting the Risk Today Driver, driver characteristics and attributes Driving record accidents and violations/ubi Where does driver drive/garage car What kind of vehicle

New Problems and Issues Are AV s safe how do we know? Liability driver, manufacturer, software provider? Given a liability scenario--rate the policy Hacking risk/ software updates Cost of technology/ the driving environment

Are These Things Safe? How do you test the vehicle to be sure it is safe? Number of accident free miles Testing the software

The Liability Issue Who Pays? Tort or No-fault Product liability system Rules of product liability are exacting Alternative liability systems Vaccine liability treatment

Rating the Risk Who or what is being insured Full time/part time autonomous system How good is the software/hardware The driver and his driving experience The vehicle itself

Other Issues Hacking/software updates Cost of technology Who owns data Mixture of vehicle on the road Anticipated frequency

Issues Raised by Autonomous Vehicles For additional information contact Patrick B. Woods Insurance Services Office (201) 469-2679 pwoods@iso.com

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