Autonomous Boating: Uncharted Waters for Insurers

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Quadrant Information Services: As self-guided watercraft become a reality, property and casualty insurers will need to trim sails and adjust course.

Macauley, CEO of Quadrant Information Services, advises insurers to prepare for changes in the autonomous boating industry

As the industry develops, we need to maintain an ongoing understanding of it to properly protect the people and companies affected by it.

The insurance industry, already struggling with the implications of self-driving cars and trucks, is about to be faced with a new challenge: autonomous boats. “It will come to pass more quickly than expected,” said Michael Macauley, CEO of Quadrant Information Services, a leading supplier of pricing analytics services to property and casualty insurance carriers. “Look at cars: a few years ago, the idea of a driverless car was regarded as science fiction. Now it’s real, and soon it’s going to be a common reality; it’s predicted that 10 million self-driving cars will be on the road by 2020.1 The same thing is happening with boats, and the insurance industry needs to start preparing for it now.”

Macauley noted that among those working to develop autonomous boating is one of the world’s best known and most advanced users of maritime technology: the United States Navy. In a demonstration by the Office of Naval Research (ONR) in Chesapeake Bay in October, 2016, autonomous unmanned boats, guided by software, radar and other sensors, displayed the ability to perform collective patrol missions using remote human supervision rather than direct human operation. “This demonstration showed some remarkable advances in autonomous capabilities,” said Cmdr. Luis Molina, military deputy for ONR’s Sea Warfare and Weapons Department. “While previous work had focused on autonomous protection of high-value ships, this time we were focused on harbor approach defense.”

The autonomy technology being developed by ONR is called “Control Architecture for Robotic Agent Command and Sensing,” or CARACaS. The components that comprise CARACaS—some of which are commercial, off-the-shelf items—are inexpensive compared to the cost of maintaining manned vessels for certain dull, dirty or dangerous tasks—and all of which can be found in the work of harbor approach defense, experts say.2

While the U.S. Navy (and navies of other nations) are intently focused on programs of this sort, military applications will probably turn out to be a relatively small and specialized niche of autonomous ship technology. Ninety percent of all world trade is carried out by the international shipping industry, and crew costs account for anywhere from 35% to 50% of the total cost of operating a container shipping vessel—providing a major cost savings opportunity for drone ships that can navigate themselves.

Full-bore autonomous deep-ocean shipping will require some capabilities that don’t yet exist. One company that is attempting to create such capabilities is Rolls Royce, which has been working on drone ship technology since 2013. Rolls Royce notes that it isn’t just labor costs that could be cut by remotely controlling a ship; the company believes that cutting out on-board infrastructure needed to support crews could result in a 12% to 15% savings in fuel costs.3

“Just as with cars and trucks,” said Macauley, “the potential financial benefits of autonomous boating and shipping are enormous. And, judging from everything we know now, so are the benefits in terms of increased safety and reliability. As the industry develops, we need to maintain an ongoing understanding of it to properly protect the people and companies affected by it. At QIS, we’ll be gathering and passing along to our clients information that will help them to remain competitive in this rapidly changing world.”

About Quadrant Information Services:
Quadrant Information Services, headquartered in Pleasanton, CA, provides pricing analytics solutions for property and casualty insurance companies. Quadrant gives actuary, product development, pricing, sales and marketing personnel at its client companies—which include all the major insurance carriers in the United States—the data they need to make accurate, data-driven decisions. An industry innovator since its founding in 1991, Quadrant has provided the P&C insurance field with a long series of technological advances, including InsureWatch, the industry’s first cloud-based pricing tool, which allows the user to produce unlimited combinations of reports with the click of a mouse. For more information, and to learn why Quadrant is for insurance companies that are tired of losing the right customers and winning the wrong ones, please visit http://www.quadinfo.com.

1.    “10 million self-driving cars will be on the road by 2020,” Business Insider, June 15, 2016.

2.    “US Navy Demonstrates Autonomous Unmanned Swarm Boats,” Marine Insight, December 20, 2016.

3.    “Drone Boats and Drone Cargo Shipping by 2025?”, Nanalyze, April 9, 2016.

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Karla Jo Helms
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