Driverless Cars and Their Relation to the IoT

By Michael Macauley

The development of the Internet of Things has taken root in the auto insurance industry.

As consumers in the 21st century, we have become very accustomed to the presence of technology in all aspects of our lives. Whether it be the millions of available smartphone apps, home-monitoring devices (security, lighting, heat, etc.), or wearable technology (FitBit and Google Glass), the Internet of Things has become an insurmountable force in our world and shows no signs of stopping. While the examples of IoT technology are seemingly endless, one topic comes to mind when breaching the subject of car insurance: autonomous vehicles.

Ford Motor Co., for instance, says it intends to introduce fully driverless cars to the public by 2025, and other manufacturers (Mercedes, Volvo and BMW) are currently creating their own test vehicles. Even if you are not paying attention to the insurance industry, you have surely heard of Tesla's and others' experimentation with this technology, and many have already started testing out features of autonomous driving. Autonomous vehicles are already changing the landscape of the insurance industry. So how does this new tech tie in with the Internet of Things?

Driverless cars require an immense amount of data gathering and analysis due to their connection to cloud-based traffic and navigation services, among other outlets for connectivity. "By 2020, consultancy Gartner estimates that nearly 250 million cars will be connected to the internet," according to an article published at, "and PriceWaterhouseCooper forecasts that the connected car market will be worth $149 billion by that year." Considering these impressive forecasts, it is imperative that companies do their due diligence to ensure proper monitoring and analysis of this new influx of data. For instance, a Hewlett-Packard (HP) study determined that 70 percent of IoT devices are vulnerable to attack, which certainly is cause for alarm when considering that the device in question could be your car.

For example, when autonomous car software is linked to the cloud, the data risks security breaches and can become prone to hacking. This happened last year, when Fiat Chrysler recalled more than a million vehicles due to a software glitch that would have allowed hackers to take control of the vehicles. To ensure these vehicles are following through on their promise of increased safety and convenience, it is pertinent that the autonomous vehicle industry protect its newfound connectivity to the internet. The HP study recommends that organizations "implement an end-to-end approach to identify software vulnerabilities before they are exploited."

The emergence of driverless cars and its connection to the IoT raises several fears, as the technology is still unfamiliar to most: How will the vehicles handle in high traffic? Can the vehicles be hacked? What if the driver needs to take control of the vehicle? Will the system give drivers a false sense of security and, therefore, lead to accidents that could have otherwise been avoided? Despite these fears, however, it seems companies are certainly doing their due diligence to ensure the protection of data and the safety of the vehicles. According to an article at, "the people who are stepping in on driverless cars are the major players—like Google, which has the best security team in the world." Considering the fear regarding security breaches, companies are sure to increase the attention they pay to preventing malicious activity.

Regardless of any concerns, it seems the fear of data security breaches is not severe enough to quell the growth of the autonomous vehicle industry. But if autonomous vehicles and the IoT are to offer more good than bad, how does it all affect your auto insurance rates? Huffington Post reports that "per the Insurance Information Institute (III) even if you don't plan on getting one, all consumers are likely to financially benefit from self-driving cars." How? It's simple: autonomous cars will make roads safer through their interconnectivity (via the IoT), meaning fewer accidents and fewer claims filed, meaning consumers are less at risk, meaning insurance companies will need to lower their premiums overall. If drivers are convinced that autonomous cars will decrease the chance of accidents, the demand for auto insurance decreases and insurance companies will need to accommodate that.

Like it or not, driverless cars and the IoT technology that accompanies them are seemingly here to stay and will undoubtedly continue to advance into not-yet-thought-of territory. The development of the Internet of Things has taken root in the auto insurance industry, and is changing overall corporate strategy in that sector. And although its rise has presented safety concerns, the implementation of the IoT in auto insurance is not without benefit to the consumer.

Michael Macauley is the CEO of Quadrant Information Services, headquartered in Pleasanton, Calif. For more than 25 years, Quadrant Information Services has generated national price comparisons for insurance companies and consumers and, in so doing, has created a new culture in response to technological growth.