Emerging risks

Emerging risk 1

Emerging risk 2

Autonomous Vehicles

Population Aging

Category

Environmental, social and technological

 Social and economic

Description

The commercialization of autonomous vehicles is an emerging future trend. 

An autonomous vehicle is capable of performing all driving functions from origin to destination without any human intervention. 

The use of such vehicles introduces accident risks that are currently unknown to both the company and the industry, as well as uncertainties regarding the insurance coverage responsibilities of an insurer in a market increasingly oriented toward sustainable and technological mobility

Currently, there are no autonomous vehicles available on the market in Spain, although several projects are under development. Moreover, current legislation does not allow drivers to relinquish control of the steering wheel at any time, meaning autonomous vehicles would not be permitted in Spain today, even if the technology were available. In some U.S. states, such as California, semi-autonomous driving is allowed, which involves letting go of the vehicle controls. 

The proportion of elderly people has increased by 21% in 2020 for those over 65, and by 3.4% for those over 80—nearly doubling in two decades. 

In Spain, the driver’s license census from the Directorate-General for Traffic (DGT) shows that there are over 27 million drivers, nearly 16% of whom are over 65. Furthermore, of the 1,273 traffic fatalities on interurban roads in 2022, 283 were over 65. In urban areas, of the 473 fatalities, 184 were also over 65, representing 39% of the total—the largest victim group. 

Therefore, population aging, loss of purchasing power, and stricter driving regulations represent a risk with unknown long-term behavior. As a result, insurance demand may decrease as the proportion of this age group increases, although the emergence of autonomous driving may help mitigate this risk. 

Finally, population aging—combined with declining birth rates and increased life expectancy—has a significant effect on the financial sustainability of public pension systems and may impact insurance marketing in various ways. 

Impact

Additionally, commercial-scale autonomous drone freight transport is expected to reach technological maturity. It is anticipated to mature within a decade and generate a significant economic impact, estimated between $31 billion and $46 billion annually in the U.S. GDP by 2026 Línea Directa could be affected by this emerging risk, as it impacts a core business line. Although the impact would be gradual. 

• Uncertainty regarding the legislation applicable to the use of such technologies in vehicles in Spain. Línea Directa identifies potential legal gaps and uncertainties due to the lack of a thorough analysis of specific cases, which prevents clearly defining possible liabilities. 
• Línea Directa foresees significant uncertainty regarding the insurance coverage for these vehicles, as well as the determination of the scope of liability—whether it lies with the insurance company, the vehicle manufacturer, or the software developer. Claims processes would need to be revised for this type of vehicle. 
• Given the uncertainty about whether third-party-developed software and AI behave ethically, or whether software developed in a third country should be applied in Spain or the EU, Línea Directa would be bound by regulation and would need to assess the different ethical approaches of various software systems. 
• Adaptation of infrastructure across the country (traffic lights, beacons, etc.) to improve current accident rates. This aspect could impact underwriting depending on the geographic area. 
• Economic losses resulting from failure to adapt to changing consumer preferences or to meet new business demands due to an inability to assimilate changes driven by accelerated digital transformation. Product innovation and coverage areas would need access to information to generate valuable solutions for customers. 

The most significant effects observed from this risk include: 

• Changes in mobility consumption patterns in search of more affordable alternatives to personal vehicles, which could impact the average premium of the motor insurance portfolio. 
• Regulatory restrictions (age, physical condition, etc.) and a decrease in demand for insurance products offered by Línea Directa (mainly in the motor segment). 
• Uncertainty regarding accident rates related to the physical condition of the elderly population. This applies to all Línea Directa business segments: Auto, Home, and Health. 
• New ‘young’ customer profiles related to individuals from other countries gradually relocating to Spain, which would require a rethinking of the marketing strategy and a review of distribution channels.  

Mitigating actions

The actions Línea Directa is taking to mitigate these risks are as follows: 

• Training and research in algorithms, autonomous mobility analysis, and statistical modeling of new mobility variables (infrastructure, black boxes, etc.) to support the development of new business lines. Línea Directa currently offers insurance for vehicles equipped with ADAS (Advanced Driver Assistance Systems) and uses the insights gained from the claims behavior of these technologies to apply them to autonomous vehicles. 
• Ongoing monitoring through Línea Directa Group’s Regulatory Radar to identify any legislative changes applicable to the company’s area of activity. 

The actions Línea Directa is taking to mitigate the situation include: 

• Understanding the needs of the elderly population, such as mobility safety, home automation, personal services (companionship, home repairs, etc.), and healthcare.
• Understanding the new profiles of “young” customers from other countries who are helping to offset the aging of the Spanish population. 
• Continuous monitoring through Línea Directa Group’s Regulatory Radar, with the aim of identifying any new or existing changes in relevant legislation, whether related to data protection or other regulatory developments.