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At State Farm, Self-Driving Cars Evolve From Threat To Opportunity

Ryan testifies
Ryan Gammelgard from State Farm testifies earlier this year before the Subcommittee on Housing and Insurance (House Committee on Financial Services) in Washington, D.C.

Editor’s note: This story is part of a special episode of GLT’s Sound Ideas focused entirely on autonomous driving. It aired Nov. 21. Read more stories in the series.

Just a few years ago, big insurers like State Farm were having a bit of an existential crisis about what autonomous vehicles might do to their business model.

At first blush, self-driving technology promises no more crashes. No crashes means no need for insurance. And that means no State Farm.

“People got concerned. What do we do about this?” said Ryan Gammelgard, one of State Farm’s top voices on autonomous vehicles (AVs). “Fast-forward to today, we realize there will continue to be crashes. This technology is not going to be perfect. It’s going to be a long time before you get a critical mass of these vehicles on the road.

“We’ve changed our mindset from concern to being optimistic about an opportunity for us,” said Gammelgard, a lawyer working on public policy issues related to AVs.

As the country’s largest auto insurer, it’s no surprise State Farm is trying to play a leadership role in how AVs will change the business. It was the only insurer appointed to the U.S. Department of Transportation’s AV advisory panel last year. It’s heavily involved with the University of Michigan’s MCity, one of the earliest and most prominent AV test environments in the country. 

Scientists and screenwriters have been dreaming up self-driving cars for decades. The insurance industry “has just really revved up and ratcheted up our engagement on AV issues” in the last two or three years, said Gammelgard.

At State Farm, staff monitors (and tries to shape) AV legislation in Congress and state legislatures. Gammelgard testified in front of the U.S. House Financial Services Subcommittee on Housing and Insurance in May. State Farm’s Strategic Resources area is researching the issue, and even areas like Claims, Underwriting, and Enterprise Technology are involved, Gammelgard said. 

“This technology has the potential to impact every area of the company,” he said. 

VIDEO: Gammelgard testifies in Washington, D.C., in May.


There’s sort of a precedent for this. State Farm famously filed suit (and won) in the early 1980s when the federal government tried to backtrack on implementation of seat belts and airbags. A State Farm lawyer called it “a stunning victory for auto safety.” 

“From a State Farm perspective, we look at it as an opportunity. We’ve always been supportive of technologies that helped enhance safety and made our customers’ lives safer and better. And we see great promise in this technology as long as it’s done right,” Gammelgard said.

Access To Data

For State Farm, “done right” means access to data. It’s been pushing state and federal policymakers to ensure that insurance companies will continue having access to the data that helps assign blame after a crash. In today’s cars, that data typically comes from an event data recorder (EDR), also called a black box.

Data like that becomes even more important if, say, there’s a crash between two driverless cars.

"What we are concerned about is, if there's a crash, who's responsible for that?"

“Who is the witness to that crash? Are we going to be able to pull together relevant evidence and information to determine who is liable for that crash? Who’s at fault?” Gammelgard said.

There’s been “some resistance” from tech companies and manufacturers on data access, Gammelgard said. They say they’re concerned about insurers gaining access to proprietary information about how AV vehicles work—an argument Gammelgard discounts.

“We don’t care about that. We’re not concerned about the proprietary information. What we are concerned about is, if there’s a crash, who’s responsible for that? And, if the promise is that this technology is safer than humans, we think they should be willing to share that information,” Gammelgard said.

While data access is an immediate issue, others are farther out on the horizon.

State Farm’s auto business is largely built on personal policies—a person who owns a car and needs a policy to cover herself. But if companies like Rivian are right in predicting the future, more people will turn to short-term rentals (or subscriptions) for irregular vehicle use. That could shift liability from individuals to products or fleets, meaning State Farm’s products may inch in that direction too.

“Will there be a shift? There’s going to be a natural shift,” Gammelgard said. “If more are owned by manufacturers or fleets, ideally we’re going to play a part in that. There may be a small shift toward that. But I do think it’s too early to tell.”

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Ryan Denham is the content director for WGLT and WCBU.