The rate of technology innovation in the automobile industry is amazing. Today, there is everything from gadgets that you never thought you would want in a car – including a vacuum in the new Honda Odyssey – to technology direct from jet fighters, such as “Heads Up Displays” where built in GPS, speedometers, and other data are visible on the car’s windshield.
Much of the innovation is around safety, such as lane assist, blind spot monitoring and collision avoidance systems. All of this is on the path to the much-awaited self-driving car.
When does innovation NOT lead to a safer driving experience? Isn’t most innovation geared towards not only making the driving experience more pleasurable but also safer? An example of this comes out of the corporate development garages of Harley Davidson – an electric motorcycle.
An electric motorcycle can’t be that much of a shocker. Ever since Tesla has shown that electric cars can be sporty, fun to drive and, yes, really, really cool, it was only a matter of time until someone came up with a “cool” electric motorcycle. Dubbed the “Livewire”, the new Harley bike is still considered a prototype and is not up for sale just yet. Harley is touring the country with the bikes to get customer feedback to help focus bike development and its go-to-market strategy.
The thing is, an electric motorcycle is inherently much more unsafe than one with a standard gas-powered engine. Why? It’s too quiet. As you can see from this “ride along”, the Livewire makes very little noise, sounding more like a turbine – very futuristic sounding, similar to what you heard from the light cycles in Tron (can’t help but mention that one of the characters from Tron, Ram, was an actuarial program forced to compete in the games).
One of the key “safety” features of most motorcycles – especially Harleys – is that they’re loud and can be heard from a mile away. When driving, when I hear a motorcycle I automatically look around trying to place the bike visually so that I know where it is. Too often, many motorcycle accidents happen because drivers don’t see them, they’re in blind spots or just not obvious. They’re loudness alerts drivers to their presence so that drivers can respond accordingly. While neighbors of Harley owners might appreciate the new electric model, there undoubtedly will be more accidents. Yes, electric cars have very little noise also, but they are much easier to spot.
It will be interesting to watch how underwriting and pricing reflect this new innovation in motorcycle engineering. Chances are that as experience develops, electric motorcycles may be “up symboled”, costing more to insure compared to motorcycles of a similar value, due to the inherent nature of a higher frequency of accidents for a motorcycle you can’t hear approaching.
To date, insurers that I’ve talked to haven’t changed their pricing to reflect new technology on the road. It’s unknown whether that’s because they don’t have the data, don’t think it’s statistically relevant yet, or just don’t want to show their hand. All insurers acknowledge that being able to spot trends early and capitalize on them is a competitive differentiator. Similar to the additional data that insurers started to capture when auto theft alarms became popular, tracking and modeling new technology data and the impact on frequency and severity needs to be an industry priority.
What about electric motorcycles? When they start to hit the streets (no pun intended), as the safety and experience data starts to develop, owners might be unpleasantly surprised to see their insurance rates go up.