Data breaches, hacking break-ins, ransomware attacks, and similar incidents are on the rise, and as the number of SDVs continues to increase, these attacks may soon spread into the automotive industry, leading to various negative consequences. Due to the growing frequency of malicious cyberattacks, governments are enforcing cybersecurity regulations and pushing OEMs to adopt more stringent cybersecurity measures. In recent years, cyberattacks have become more common and are projected to cost the automotive industry $505 billion. Key opportunities for new policies include cybersecurity insurance, product liability insurance, and infrastructure insurance for OEMs and governments. Insurance providers will need to adjust to the changes in the industry and create policies that offer coverage for a new set of potential threats for a smaller pool of larger customers. Since the cost of software-caused accidents can have a colossally negative impact on manufacturers they will be looking for ways to offset the losses.
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Between 20, new insurance policy revenues are predicted to reach $81 billion, according to a source.Īs long as vehicle performance is directly tied to software performance, OEMs will be held accountable for cyberattacks, bugs, and software malfunctions in SDVs. Nevertheless, industry disruptions are creating new opportunities for auto insurance providers, with a significant portion of these opportunities located in the B2B sector. Losses are expected to reach $25 billion, putting auto insurance providers at a risk of bankruptcy. In addition, as software improves and cars become safer, revenue from individual insurance sales will also drop. However, as ADAS and autonomous driving becomes more prevalent, the element of human error will gradually decrease, making traditional insurance policies less relevant. Traditional vehicle insurance policies typically cover physical damages resulting from driver-caused accidents. Auto insurance policies have yet to reflect upon industry developments. Yet, current events in the industry are pointing to a shift of liability from individuals to OEMs, especially when autonomous driving is involved. There is still no universal framework that decides who is liable for accidents involving software-defined vehicles (SDVs). The way vehicles operate has changed in the past decade, but the insurance policies surrounding our cars have not evolved at the same rate as the technology. However, these disruptions are bringing in an array of new opportunities in the sector and its tangent industries. Automotive system innovations are causing disruptions in the entire industry, affecting manufacturing processes, product management, policies, and more.
And while improving hardware is not new for OEMs, creating advanced software systems is a much tougher task. Modern day vehicles are much more sophisticated than ever before, where hardware and software are intricately intertwined to achieve superior car performance and user experience. The lines between the automotive and tech sector are blurring as we approach the age of software-defined vehicles.
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