Autonomous Vehicles and the Evolving Auto Insurance Market

00:16, Adam K

Good morning, everyone. Thank you for joining our autonomous vehicle and insurance discussion. We’ve got a great line up here on a topic that is becoming, say, bigger and bigger and becoming more important. And, I think over the next three to five years will be a, you know, big area in insurance. I think this is, you know, a good chance to get an idea what's going on on the early front of it.

And with the discussion, we've got a great crew. We've got Andrew Robinson, who is CEO of Skyward, Mark Haushill, who is CFO. Chris Moore, who is president of Apollo, and Taryn McHarg, who is CFO of Apollo. So, we're going to start off. Andrew's going to talk a bit about their effort around AV.

Then, the next half hour, we're going to have a good discussion about AV, progress in AV, how it works in insurance, get into some real, good, tactical details. And then maybe talk about where it's going.

At the end, in half an hour to 35 minutes, if you have any questions, and I'll Q you, please put them in the chat, and we'll definitely have some to get to it. So, with that, Andrew, if you want to take us off, that'd be great.

01:36, Andrew R

Yeah. So, thanks everybody who is joining us live, and for those who listen at a later time. So, really quickly, Skyward Group, just to give you a quick introduction, we are an insurance company with effectively a dual specialty focused platform in the United States and in Lloyd's of London with Apollo, which I'll talk about in a second.

Very well diversified company, probably the, sort of, a standout feature when you look at our business, as compared to others. And a big part of that is really around serving markets that are emerging and particularly, you know, digitally focused, innovative areas, that offer, kind, of outsized growth relative to GDP.

You know, the company's been public for almost three and a half years. We went public in 2023, January 13th. We're the first company to go public globally after, kind of, the dearth of public offerings follow, sort of, the bursting of the SPAC bubble. And it's been a very good ride.

In January of this year, we closed on the transaction to bring Apollo into the group as we know it today. Apollo is a Lloyd's of London business, with two principal points of focus organized around two separate syndicates, which effectively are, kind of, dedicated capital structures.

One of those syndicates, 1969, is a multi-line, specialty oriented, sort of, Lloyd's, very much Lloyd's focus, specialty classes syndicate. And the other syndicate, 1971, which we call ibott, is really focused on the digital economy and where our efforts in autonomy, and AV specifically, was germinated. Without getting too far into, I think the conversation we're about to have, I would just, sort of, set up our experience as follows:

We are, undeniably, the market leader in autonomy, broadly. We, as an example, lead a consortium out of London serving a facility called Moon Rock, where we are, effectively, the lead capital with other Lloyd's syndicates behind us.

And on the AV front, specifically, we have been writing autonomous vehicles through Apollo ibott for nearly ten years, and are by far, sort of, the most experienced company in the world in insuring AVs.

And I think that, sort of, the big event that brings us to the conversation is the announcement that we made earlier this year, which is a partnership with Uber. As Uber launches their AV platform as an extension of their ridesharing platform and selected Apollo ibott as their strategic insurance partner providing coverage to the platform, which we'll get into a minute, in terms of how that works, what the scope of it is, and all the, sort of, unique characteristics of that, as compared to maybe how folks might ordinarily think about insurance.

And, so, I think, you know, it's fair to say that we're having this conversation today with a depth of experience. We’re at the thin end of the wedge of what is obviously going to be a significantly growing market.

And, you know, we're way out in front in terms of IP and I think just general recognition in the market. So, that's the set up. And, yeah, Adam, I'll hand it back over to you.

05:26, Adam K

Great. I think that's a that's a really good intro, just sets the stage for, you know, the fact that, you know, not only do you have a lot of significant presence, but, you and Apollo have been, you know, involved for quite a while in a new industry. That helps give us context.

But, let's start with, sort of, like, AV insurance 101. How does the coverage work and how does it get priced? To start with that.

05:58, Andrew R

Yeah. So, Chris, why don’t you take that? And why don’t we talk through the Uber, you know, platform lens.

06:15, Chris M

Yeah, of course. I think it's sometimes easier to actually answer what the product is not. And quite often we get asked the question, where should autonomous vehicle liability or where should that risk sit? And it's a classic mistake that insurers make, which is, you know, forcing square pegs into round holes or trying to force them into one of our beautiful insurance silos, that we've had and relied on for decades, if not centuries.

So, the argument becomes, is it an auto liability policy? Is a general liability policy? A product liability policy? And those questions get asked. And for us, it doesn't have to be any of those things. There's fundamental issues with those policies because they've been constructed to insure a different type of risk. And if you try to force them into that bucket, you know, cracks start unraveling.

So, a good example would be an auto policy, a commercial auto policy in the United States, even a personal auto policy. To trigger the coverage, there must be an accident. It's an accident-based trigger. Well, there's an argument that an autonomous vehicle or any form of AI doesn't really have accidents. They are carried out intentional acts. So, if they are involved in a collision, and it's deemed that they are at fault or contributed to that collision, then you'd argue, well, there's no accident to trigger the coverage, it meant to do this, it intended to act in that sort of way.

And then you bring in things like most policies for insurance, intentional acts exclusions. How does that work? And we've seen that with big tech companies in recent litigation. So, loads of issues there with providing that type of auto liability solution to autonomy. Not to mention, you know, auto risk is modeled on a per vehicle year basis.

These vehicles, you know, have a very, very different type of utilization. So, we apply, you know, an exposure metric of mileage, which is a full usage-based insurance product embedded into the system. So, lots of fundamental differences. You could then say, okay, if it's not auto, then is it product liability? Which is tends to be the next place that people will go.

Well, the issue with product liability is they're single aggregate limits. So, it creates a vertical exposure rather than a horizontal exposure. And also based off revenue, so any products liability company isn't going to be able to model or price accurately the type of autonomous vehicle liability risk. So, what we created at Apollo is - AI and autonomy is going to be so disruptive, but the opportunity is so humongous. Before we get to this stage we're at today, which is, you know, mass scale commercialization, let's create a policy that’s fit for purpose.

So, we've created a bespoke coverage form that blends a lot of our old traditional insurance silos of auto and products together to create an autonomous vehicle liability policy. So, if an autonomous vehicle is in an accident, we're not worried about whether it's auto products and pointing fingers at different policies and how they respond.

It is a comprehensive blend of all those coverages, so we've wrapped all those coverages together into one simple, comprehensive policy.

09:13, Adam K

So, Chris, so how do you price the policy. It’s much different. How long have your AV policies existed? And maybe talk about how the pricing has evolved over time or how you how you price it, not what the price is.

09:32, Chris M

Yeah, absolutely. We've actually first insured an autonomous vehicle in 2015. So, it's been over a decade. And it wasn't a case of we got sent a submission, and we issued a call, and then we spoke to 12 months later. It was a very large company. And they are the leaders, at the moment, in autonomy.

And they said, look, we want a bespoke solution. We want a solution that is fit for purpose for this technology because this is the journey we are on, and this is where we think it goes. So, we sat down and actually created a bespoke wording in back in 2015. So, this is a topic in a conversation that we have had a lot of times.

And we also went into that partnership knowing that at that stage we didn't have any data, but we were going to record the data on the most granular level that we could, that was sustainable, so we weren't looking to collect sort of one hertz frequency to telemetry data. It was more let's look at what's going to drive the exposure, drive the pricing.

And so, for a decade, we've, kind of, been building up an AV pricing model. Today, we have a pricing model for AV. There's proprietary within Apollo. We use that on all the pricing we have. So, we make a risk assessment of each and every AV submission we see, and then we apply that into a modeling process.

At its core, of course, we're going to blend that with some form of human driven loss data. Because whilst you know the models in autonomous mode, and level three, and level four autonomy, are growing exponentially every year, we still don't have a huge amount of developed claims data, but we have more than anyone else. And when you look at it, it's undeniable within the data what the frequency of collisions, the frequency of accidents is.

If you read some of the, you know, the public release reports that Waymo do, the safety reports, you can see that, and I know there's been a lot of controversy about how accurate that report is, but our data certainly validates that, you know, the frequency reduction could be as high as 90%.

And so that’s a start.

11:37, Andrew R

And Adam, I think, just to put an exclamation on Chris' point on the proprietary pricing approach. So, it is usage based, so per mile. If you use the partnership with Uber as an example, we are getting frequent data drops. So, the models are improving at cycles that are very fast. You know, these are not annual cycles of pricing changes.

And, over time as, sort of, the quantity of data, so you can look at, you know, different AV operators or configurations, you can, you know, consider, you know, geofencing and traffic patterns, you know, human traffic, times a day, anything that that would allow you to better, understand the characteristics of exposure that could lead to, you know, some event where a person is injured are all things that are fair game for pricing.

It just has to be practical and supported. You know, one of the powerful things is that, you know, if you take, like the Uber platform, you know, let's say that there's 20-ish operators coming on the platform, you know, over some reasonable horizon that they're targeting, you know, we'll get to see the performance of the 20 different operators.

And they may be soft performance. It might not necessarily be things that lead to events that emerge to claims. It could be the performance of the of the AVs, in comparison, in life situations, you know, things like, you know, hard braking and so forth. So everything, for us, is fair game, and it's just a question of, sort of, cycling through the sophistication, because in the end, you know, what Uber wants is, ultimately, a well-functioning, incredibly safe platform.

And, you know, ultimately, for consumers to use the product, right? And so what we're delivering towards that end is, you know, it's critically important to that.

13:54, Chris M

I'll just add on that quickly, Andrew. You know, at its core, this is a lot easier and a lot simpler from a risk perspective in many ways when you compare it to, sort of, commercial auto insurance, if you will. In a commercial auto insurance, in a fleet setting, I have to, you know, I have to ensure every driver and all those drivers drive differently.

They have different characteristics in the times that they drive, the manner they drive. That's why, you know, lots of, you know, commercial auto insurers use telematics. Well, here, at its core, we're insuring one driver for every AV company. It's one driver. There's no adverse selection. I don't need to worry about where I marketed, when I'm acquiring these customers.

You have this very close commercial partnership, and safety is everything that they do. Obviously, there's a bit of a trust issue with AI and autonomy. And insurance is a vehicle for trust. So, for us, you have this really engaged partner that wants to share as much data as possible so they can make sure that they're safe, operating, and have insurance that is fit for purpose.

So, it's a great place to be for us. And that's why we've enjoyed this decade of building up the data set. We're now in a place that we believe we can accurately price that risk going forward.

15:03, Andrew R

And to investors, of course, one of the powerful things in this conversation with Skyward Apollo is just simply that we are the sole partner of Uber. And so, you know, I think that while Chris would say in some ways it's easier, the value of the information, and the insights, and, ultimately, the pricing model, is something that, you know, Uber wants to keep, in a very narrow domain.

And, and so, you know, we're selected as a partner to them and nobody else has that position. Nobody else gets the data. So, it's really, in fact, incredibly unique in that regard.

15:41, Adam K

Yeah. So, Chris, going back to the claim. You said 90%, so is that 90% less claims, number one? And then two, what's the experience on the severity side?

15:53, Chris M

Yeah. So, it's 90% less collisions. Not every collision is necessarily a claim. And yeah, the relatively, the more difficult thing to model is severity. I think it's undeniable that the severity of injury is lower. We've already seen that with certain instance. In this instance in the press, you know, Waymo, hits a small child.

It was in, I think, a 20 mile per hour or 20km hours or so. And, I think by the time, because of the, you know, no human reaction times, I think by the time of the collision, it was down to, sort of, five or six. And that child got up and walked, brushed themselves off. And there's no claim, there's no injury.

But the unknown part, and this is why I also think we are strategically positioned because of our experience, again, over a decade of experience in ensuring all types of mobility and sharing economy platforms, whether it's on demand delivery, last mile delivery, you know, human based rideshare. We're experts at defending severity type potential claims. And what you have here is, in a U.S. judicial system, I'm sure that people, or plaintiffs, will come and look at legal system abuse towards autonomy and will try and paint the picture of “for an extra investment in this test or that test, the technology wasn't ready, and this is why we want, this, you know, humungous, nuclear, thermal, nuclear verdict.”

What I think is really, really interesting about that is this rideshare model and the AV ecosystem that they are building. Because if you are insuring an autonomous vehicle, that is going to be the claim against whoever that autonomous vehicle is, is that you should have done more testing. You put a dangerous product on the road, now you must pay.

That's what the plaintiffs will do. And remember, if you are going to completely disrupt the commercial trucking space, and the rideshare space, and all types of transportation, that is where plaintiffs have had a lot of reward in that legal system abuse and getting those nuclear verdicts.

So, autonomy, at scale, spoils that party. Well, it gives them 90% less ability to pay one of those nuclear verdicts. So, they're going to aggressively fight it. But in that rideshare model, if you make that claim against an autonomous vehicle company, the rideshare model itself is uniquely positioned to be able to, for the first time, give a, you know, a direct comparison between human driven performance and autonomous vehicles.

They can say in Austin, our autonomous vehicles, on our system, on our platform, they are five times less frequent in terms of collisions. And when they are a collision, the severity of injuries this much reduced. So, we have connected you with the safe as possible form of transportation. You can't come for us. And that is a defense that is incredibly exciting.

And you can see that driving down insurance costs potentially and then, you know, improving economics. Now, the flip side, on the human side, is quite concerning because if you flip it around and all of a sudden you have this pendulum where the data is undeniable and the humans aren't safe, do the plaintiffs flip the script on you and say, okay, well, you should have connected moving autonomous vehicle. So, you could see this disparity in insurance pricing, driving a rideshare platform to say we're going to be autonomous only.

19:06, Andrew R

Now, all that said, just one item on this. So, well, two things. One is Uber. If it's not obvious, Uber is uniquely positioned to do what Chris described, right? Because they have, you know, an abundance of traditional rideshare data at a scale that nobody else has. And, needless to say, they're going to be leading in terms of AV rideshare.

I think the other part is, since we talked about claims scenarios, I mean, just to like, kind of, give it the full balance, right? I think, you know, on the positive side in terms of being able to address a claim, the amount of, kind of, knowable information, and I would actually say the actual knowable truth, right?

Given how many cameras, lidar, radar, environmental information, onboard information, things like G4, so forth, whether all that, you know, you're getting millions of instructions every microsecond and all of that is captured. And, so, there is really one version of the truth that’s knowable. By the way, that isn’t available to the plaintiff side until, actually, discovery, right?

So, there's a big investment to get to that point, which is very different than how the world of, you know, sort of, human exposure might work. And, on the flip side, of course, is you are dealing with large, well-capitalized organizations. So, you know, the plaintiff bar will look at that as potentially a source of a payday.

But, you know, on balance, given everything we know, and given our experience, by the way, there's no question about it that it looks like the AV is set up really well, even if the tort environment doesn't evolve to be a more, sort of, reasonable environment here in the U.S.

20:59, Adam K

So, in that, Andrew, Chris, it's early, but do you have any early data points on personal injury? You know, I imagine some, you know, there are some cases out there. Maybe they are not settled, maybe some are.

21:13, Andrew R

We do, we do. But I'm not going to let Chris share with you. But we'll just say that the results are the results have been very good. I mean, you know, ibott’s results are outstanding. You know, they're in the public domain. And there would be nothing about our insuring of autonomy that would vary from the outstanding results that the company has generated.

But I don't think we really want to provide that, you know, that kind of specifics out into the market.

21:42, Adam K

And so then let's switch to how is the AV market evolving? How's it growing? Where do you see it going? You know, you have Uber, Waymo. And, you know, you guys know the statistics. Maybe you can share some statistics on how quickly it's growing and where it could go in the next two, three years or so?

22:04, Andrew R

Chris?

22:05, Chris M

Yeah, sure. I mean the growth is pretty phenomenal. You know, you look at some of the individual states and how much market share someone like Waymo has captured of that rideshare market. It is staggering, that growth. And that was all widely publicized on their growth report that they issue quite often.

I think what's really exciting for us is the broader autonomy. I think with the Uber AV platform launch, that they will bring more companies to the U.S. You've already seen Wave in the UK looking to come to the U.S., and, on all those, you know, partnerships they've made with new AV companies.

That will be a factor, I think the demand is there. For everyone I speak to, for myself personally, if you've been in an autonomous vehicle in the United States, it is a very nice service. There's a huge amount of benefits, not to mention the millions of lives the technology could save based on the data we see in terms of frequency of collision reduction.

23:09, Adam K

Chris, real quick. Where do we sit from a regulatory standpoint? Roughly how many states have approved it? How's that going to progress?

23:21, Chris M

Yeah. So, obviously, when you've launch a rideshare, it is very much a state specific thing. It's changing all the time. And the regulations change all the time. So, I don't know the exact number off the top of my head. But there is a ton of lobbying to have these cities. I actually think the customer demand will drive that change in regulation because, you know, people are desperate to have the product in their cities.

You know, it is a luxury service. And, I think, for a lot of people, it is a preferred service. You know, it's very widely reported that a heavy part of Waymo's ridership is women. And a lot of women will say I feel much safer in autonomous vehicle than I do in a rideshare vehicle with a stranger I don't know. So, it's going to grow.

When you have that demand, I think you'll see the cities pass that. It is the biggest blocker, I think, at the moment, for AV commercial trucking. Because if you can imagine, when a truck is going across multiple states, if one of the states hasn't approved AV trucking, then what? Are you gonna have to have a human meet them at the state border to drive across that part and then get out? It's really complicated, a little bit of a logistical nightmare.

Once that paves the way, and from what we're seeing, you're going to have removal of the driver, you're going to have insurance cost optimization, that can help deliver more products, and goods, and services to every household in America. That's something to get behind, not to mention the millions of lives we can save.

So, I think when that starts to take shape with regulators, I think it will accelerate. Quite pleasingly, California just passed the first regulatory change to allow AV testing of trucks in America. And one of the biggest, you know, freight train stations is that IoT in San Francisco and LA. So, it is a huge opportunity.

And that is something again, from a public perspective, we've been in that AV trucking space for nearly a decade, as well. If you do remember, someone like Waymo were testing AV trucks and then paused that to focus on robotaxi. But once those companies are at that scale of trust and they're at a scale of confidence in the performance of their product, they can apply that across the board.

So, Andrew mentioned about our work in the aviation industry, there's so many other autonomous use cases. Yeah, mining, agriculture, construction, manufacturing, marine and all of these are places that we definitely see a play. We're looking at the whole autonomous market, not just the robotaxis that we can see because they make the most press.

25:53, Andrew R

I would just add on the on the question of long-haul trucking. It is, first off, the regulations might, there's not an all or nothing. It could be that, you know, AVs are driving on interstates, but not driving the last mile, you know, as an autonomous. And I can just tell you from, you know, we have, a lot of experience on the on the trucking side.

I think people who follow us know that we've, you know, dramatically reduced our exposure there over the last few years. There's no question that AV will maybe even further outperform human drivers in a rideshare context on interstate, just simply because the, inevitably it's always driver distraction and tire driving. There's no question that a substantial, a substantial amount of, you know, of injury can be eliminated.

And that should be because there's also a lack of drivers in the U.S. should be an area that comes into focus, in the relatively short term. So that is an interesting growth area for us.

27:02, Adam K

This is more of a crystal ball. So that's always a little tough. But, you know, I put two categories: truck and then, you know, as Chris was saying, I mean this could go to a lot of different areas. You know, are we talking about, you know, maybe one to two years until you see some momentum? Is this three, four, five years out? And I’m not talking about the whole market switching, but, you know, seeing real tangible momentum.

27:27, Andrew R

Yeah, I think that that the way investors should generally think about this is, you know, our general sense is this is more J curve and not linear, right? You know, if you take the Uber AV platform, right, you have to get people who like the, you know, get used to using the product, but you also have to have, like, decent capillarity.

Like, I check with my daughter all the time, like, should young woman living in New York City, would you prefer an AV product or even driver? Absolutely. You know what happens if you have to wait 15 minutes? No, I'm taking it.

And then we, kind of, like, narrow down the gap. So, you have, you know, there's, kind of, like the scale and the familiarity. But it's definitely a J curve, kind of, characteristics.

I think from our standpoint, we're probably, you know, we’re really talking about the Uber AV platform first. And some of these other things are going to be subsequent, we're probably, you know, 18 to 24 months out before this really becomes, you know, something that you can see working through our P&L.

And the good part of that is correspondingly, you know, we'll be on iteration XXX on our pricing model, which, you know, which, kind of, feels like the right thing for us, right? Because, you know, no matter how good we feel about this as a category, you know, we want to have, you know, like, genuinely world class, you know, as close to real time pricing as we possibly can. Because the scale of the opportunity will explode.

And, you know, we want to be as prepared as you possibly can be. And, so, that kind of, you know, curve of, sort of, impact to our financials, kind of, fits with our risk management model, as well.

29:16, Adam K

And then, you know, what about some of the big companies like Amazon, DoorDash, you know, do you think they're still a couple years away or is that, you know, something we could see some movement in the next couple of years?

29:29, Chris M

Well, Amazon obviously has Zoox. So, they have their own autonomous platform they're developing. I absolutely see that scaling. And, you know, Waymo has paved the way for a lot of people, both on regulation, both on trust. Certainly, they are the leader. You know, people are going to invest a lot to catch up because I think people are realizing that this is undeniable technology that's going to transform mobility.

You will see in DoorDash, they’ve also announced, you know, partnerships, one with Waymo. And they're also developing another form of autonomy that we are actively involved in, which is the, sort of, the delivery robotics side of the house. So, there's another really exciting area there with DoorDash Dot, so I think that's really, really exciting.

I do think what you're seeing is the cost savings, on the insurance side and also the labor force side, and all you can see, that is one element. But what you are seeing, which is also going to accelerate the timeline, that a lot of people, I think, will be surprised of how quick it might happen. I don't believe that 20, 25, 30 years away. I certainly do not believe that.

But it is the cost of the technology itself that is reducing all the time. So, at scale, you know, I can remember when we first started insuring autonomy, some of the vehicles that we insured were worth more than $1 million, and that cost is hugely reduced. And when that cost hugely reduces, if you start seeing you can build an autonomous vehicle to quite close to how much it costs for a human vehicle, the cost will get to a point it is undeniable, and that will just fuel this.

Like Andrew says that J curve of growth.

31:06, Adam K

And then on the technology side are there one or two things we can watch for to make, you know, make the autonomous vehicles easier to use? Well, not easier to use, but, you know, get it out there quicker? You said it's advancing, but what could advance it even a little quicker?

31:27, Chris M

Well, there's the age-old discussion on do you need the steering wheel?

A lot of the time and a lot of regulations, you need the steering just so it satisfies the laws of what is a motor vehicle or a licensed motor vehicle. So, when you start to see the technology designed specifically for autonomy, and you've already got over that initial trust barrier with the public, then you can start, you know, you can start to really focus on bringing costs down because you can build something that’s fit for purpose.

It's completely designed for autonomy. At the moment, we still need the autonomous vehicle to look and feel like a vehicle, so that someone's going to trust it and get in it. Even seeing the steering wheel move for some people is enough trust factor. So, a lot of it is we’re bringing the public on a journey.

Luckily, the next generation of people that come through are probably going to be more trusting of technology than, sort of, my generation, another generation. So, that trust factor is getting easier all the time. I also think you've got to trust the data. You've got to trust the technology. Of course, we've leaned into that and the partnership really helps.

But when you think about human driving, the amount of miles and the risk exposure is a linear relationship. The more miles you do, the more risk you have, the more exposure we have. And that's how our pricing model works. When you think about an autonomous vehicle, every mile is better than the mile before because they've learned from that mile.

So, the relationship is no longer linear. So, the more miles they have, theoretically, the safer they get. Now you'll never get to a zero fault or zero accidents. That's mathematically impossible. But what's exciting for now is to go on that journey and you will see insurance costs lower. That is undeniable. And for, you know, I get asked a lot of questions for Apollo.

So, you're supporting a, you know, an industry that's going to bring down premiums, the overall addressable market, we're not a huge percentage of the overall addressable market for auto. So, we may see this huge market cycle shrink to something smaller, but we’ll have a much larger share of that.

33:20, Andrew R

Yeah. You have a, in the U.S. and U.S. personal auto, you have a half $1 trillion market. And if you just, if you don't even take the severity characteristics, just use the numbers that, you know, that Chris talked about, that would say you have a half $1 trillion market that goes to $50 billion. And, not an auto market. It is a, AV market. And, look, we don't need 100% of that market share, just, you know, 20%, 25%.

And we think that, you know, it's a highly valuable company. I think to your question, though, of what drives down the cost, I do think that there's this interplay between regulation and scale, right? Because I mean if, you know, you think about all the stuff that goes on board cameras, lidar, radar, all this stuff, all the sensors, all this stuff comes down as you scale.

And, you know, I think in China, they shown that with, you know, with their products. I think it's just a question of time. But there will be an intervening period where, you know, if you're a personal auto company and you're in a mixed environment and, you know, you hit, you know, an AV, you know, it's going to be more costly property damage than today just hitting a, you know, a traditional, non-autonomous vehicle.

And so, it will be, kind of, an interesting period of transition, for, you know, for the legacy part of the market.

34:46, Chris M

And obviously we've got the business interruption linked to that, right? If you hit an autonomous vehicle, they can operate 22, 23 hours a day on the maintenance schedule. They're not strict to eight hour human shifts. So, you know, like I said earlier, the utilization is very different.

35:04, Andrew R

Adam, just one other thing, just because I don't want time to pass without, sort of, drawing this out. You know the cover for that we put in place with Uber is a very different kind of cover in that it is not only AV focus, it's a platform cover. So, it brings in all the parties who potentially, you know, they make up the ecosystem that's also generating second order opportunities for our company.

Because when you think about all the infrastructure that needs to be out there to support AV, well, we're incredibly well positioned to go after that as well. And so, it isn't just, kind of, AV alone. It's AV infrastructure and basic stuff that you can think about, like just, you know, just what happens to an AV, you know, a fleet of AVs when they're parked up and they need to be serviced and so forth.

And we have more insider knowledge about that, plus traditional capabilities. So the market is actually quite a broad ecosystem that’s available to us.

36:10, Adam K

At this point, from the audience, if you do have questions, please put them in the cta. We will try to get to them.

So, the, you know, the commercial side, which is really more of what we're talking about, obviously it's taken off this critical mass. You've been in this business for over decades, so it’s there, it’s pretty real.

What's the situation on the on the personal side? Where is that market today? And, you know, what are the, you know, KPIs or benchmarks we can watch for, for that market to begin to take off?

36:45, Chris M

Yeah. I think what's really interesting is autonomy at scale could really challenge that ownership model and shift a lot of people into utilization. The question is, when do I stop having to own a vehicle at all? Now you have this interim period, which I think is super interesting, where you're seeing companies say, I'm going to have like a level two slash level three vehicle.

So, a level two is really advanced driver assist systems, right? So, imagine a super advanced driver assist system where it can effectively drive itself. But you still have to have your eyes on the road, and you still have to be focused, and take control at some stage if you need to. Well, I think that's a huge challenge for a personalized insurer, because at what stage is it the responsibility of the owner of the vehicle?

On what stage is it the responsibility of the company that manufactured it? There's a real gray area there, and we are having lots of conversations with companies that want to release that technology at scale. And they're really coming to us for the solution because we have the knowledge.

Because even from treating customers fairly, if Andrew's and his vehicle is driving itself, and he has a collision, and then he has to pay his deductible or his excess, and then his insurance costs go up, I can imagine he'd be pretty ticked off because he didn't do anything to touched the vehicle. But yet, he's the, sort of, person that's at a loss.

And so we're solving that. Then you get to this model of what if the vehicle has level three, level four autonomous capabilities? And the way to think of that is you no longer need to look at the road. You can be on your laptop, you could be working, you can sleep, you do whatever you like because the vehicle is driving itself and does not need you to take over at any point.

That's the question when I go, I don't understand why you'd own one of those, because historically, your vehicle ownership, whatever vehicle everyone has on this call, is probably idle for 98% of the time. And so, you could have that vehicle doing work and servicing a lot more mobility if you didn't own it. Now, I'm sure there will be super wealthy people in the world who want to, or want to not share it, but it seems like somewhat of a luxurious asset that you just don't really need to own.

38:59, Andrew R

But for the avoidance of doubt, Adam, we are, today, we are plugged into the AV ecosystem in ways that I think no other insurance carrier is. But, we're not focused on anything related to, sort of, if you will, personal ownership. You know, we are very much focused on other parts of the market that really are, I think, further away from that, sort of, core area of proposition.

You know, it's going to be a while until some of those very practical decisions that Chris is describing are being made at an individual household level. And, you know, until then, you know, we're going to be where the action is, which is, you know, which is I think a lot of these commercial applications.

39:55, Adam K

So, you know, again, it's not it's not where the action is today. It's not where the growth is. And there's a huge amount of growth on the commercial side. So, and Chris's point, you know, could be one of the sayings, the commercial could diminish the personal. But with all that said, you know, are the hurdles on the personal?

Is it still more regulatory? Is it social? People just aren't ready to do it? Or is it the technology cost of getting to level three, four is just not realistic to be in a, you know, mass production scale?

40:29, Chris M

I suppose if you think about the buying customer journey, what it'll look like in the next 12 to 24 months, you walk into, you know, a car garage of a brand that you like and they'll say, well, here's the brand new vehicle. But if you pay this subscription service and it’s $1,000, $2,000 a month, you can have this self-driving mode.

And the question is whether the consumer wants that or not. Now, for me, I would definitely buy it. I'm a terrible driver. So, I'm really looking forward to the advancement of that technology. But that will be the pendulum. I think what's really interesting is how impactful insurance could be in that pendulum, in that decision.

Because if they say, okay, it's $1,000 or its $2,000 a month, and that comes with embedded insurance, and those miles are insured under our corporate, you know, partnership, AV model that we have, hopefully that's with Apollo. And then any miles you drive yourself, that's your own insurance and you’ve got to source personalized insurance for that. So, what could be super interesting in that is, does the mentality of that owner, that driver, say, well, why would I bother driving myself if it’s much more expensive to do so? Because I’ve got to pay for this insurance.

I’ll just pay the subscription. And then you're asking, why don’t you just buy an autonomous vehicle or use an autonomous vehicle? So, that's where I see insurance can be super impactful in that that journey from, you know, ADAS level two, into level three, level four, autonomy.

00:41:57:15, Adam K

Do you think there, from what you've seen in the data, do you think there's a meaningful jump when you go from Adas to a level three, level four on the frequency and safety? You know, level two, you know, someone is still behind the wheel at the end of the day.

00:42:14:22, Chris M

Yeah. We have a lot of claims data on that. And quite often, when we look at what happened, we do it's like a postmortem. We look at what happened in the claim. Typically, if the human actually would have allowed the technology just to continue, because what will happen is the humans haven't “seen this” and they'll grab the wheel.

And, for the most part, if the human hadn't have interacted, there would have been no collision.

00:42:39:06, Adam K

Okay, great. Well, that's coming to the end of our talk. I don't know, Chris or Andrew, anything that you guys would like to finish on?

00:42:48:08, Andrew R

No, I do think that there's a, you know, there's the AV conversation, which we just had, but I think that the theme, the broader theme on autonomy, is equally relevant. And as Chris referenced around other industry applications, you know, there is, I can assure you that, you know, we're in the center of dozens of conversations that, you know, are really about the future of autonomy.

And some of it is related to AVs and some are just autonomy, like my mention of moon rock, which is, you know, really about airborne autonomy. I think that this is an area of growth and demand for our company that, you're not over, over some period of time, maybe a year from now, we won't just be having another AV, sort of, call like this.

We'll be talking about other categories of autonomy, because I do think that what we're going to see is a similar kind of level of demand and potentially with lower barriers on regulatory hurdles to pass that might actually accelerate some of these other categories faster.

00:43:59:13, Adam K

Okay. Okay. Great. Well I'd like to, you know, thank, you know, Chris, Andrew, Mark and Taryn for joining. You know, clearly, this is an area, we've been getting questions on AV for years. And, you know, to me it's exciting because here you're actually seeing, you know, real density. And, you know, I think Andrew, as you put it, you know, it's not linear.

It's more of a J curve. And you're seeing that J curve go. So, it's pretty exciting. So, thanks guys for spending some time.

00:44:27:15, Andrew R

Thank you for hosting us, Adam. And thank you to those who joined us.