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PitchBook Newsletter
March 07, 2014
Whose Data Is It Anyway? Self-Driving Vehicles and the Impact on Insurance
Friday Morning Dealmakers Column

Far from science fiction, Google’s self-driving vehicle drove a blind man from his home to a fast food restaurant, Audi now operates its autonomous vehicles on public roadways in Nevada and Nissan plans to offer autonomous cars to consumers by 2020. The technology backing these developments has the potential to not only reshape the auto industry, but the insurance sector as well.

Advancements in technology and engineering are readying self-driving cars for prime time. Automotive manufacturers, suppliers, semiconductor companies and tech firms are ramping up, developing technology in-house or forming strategic corporate partnerships to win the driverless car race. Given this market activity, the U.S. Department of Transportation recently announced potential plans to mandate vehicle-to-vehicle communication technology to enable vehicles to exchange basic driving diagnostic data (e.g., speed, braking, distance, etc.) with one another.

With all this technology, there is a trail of data—where people are traveling, when they’re driving and how fast they’re going. For PE and VC firms, this may represent some unique investment opportunities, and for insurers that offer auto coverage based on these and other factors, access to this treasure trove of information has the potential to turn their business models upside down. For example, insurers would be able to know the “who, what, where and when” of the events leading up to a claim, better understanding whose fault it was and why the accident occurred.

Given the importance of this data, many insurers are keen on securing access to, or better yet owning, the data to keep their current insurance products competitive and potentially introduce new ones. This may take a variety of forms, whether it is acquiring a company in the data technology space or forming an alliance with an OEM, automotive supplier or technology firm.

Over the last year, there has been a flurry of activity among those creating the vehicles and technology forming the backbone of this revolutionary next stage in transportation. In response, auto insurers are eager to join the conversation and call the data their own.

By Leslie G. Fenton, Managing Director and Insurance Group Head, KPMG Corporate Finance LLC, 312-665-2754, lfenton@kpmg.com and Gary Silberg, Partner and National Industry Leader Automotive, KPMG LLP, 312-665-1916, gsilberg@kpmg.com

This article represents the views of the author only and does not necessarily represent the views of PitchBook.
 
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