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Driverless vehicles and the future of motor insurance
The government has recently announced that London and Edinburgh will become the first UK cities to trial self-driving vehicle services.
The trial projects, which will allow the public to ride autonomous buses on a 14-mile route across the Forth Bridge, or book self-driving taxis to travel around parts of London, support the government’s ambition to have driverless vehicles on UK roads by 2021.
The autonomous vehicle revolution is set to transform the way we travel from A to B, with increased driver safety, better fuel economy and reduced congestion among the potential benefits.
The transition to self-driving vehicles could also have a significant impact on the way motor insurance works.
A new liability framework
To help clarify liability in relation to accidents involving autonomous vehicles, last year the government passed a new law – the Automated and Electric Vehicles Act.
Under the act, someone who is injured or whose property is damaged in a collision with a vehicle operating with high or full automation (as set out in the Society for Automotive Engineers International’s six-level classification system) can pursue a claim against the motor insurer, who will be primarily liable to deal with that claim.
The motor insurer may then have a right of recovery against the vehicle manufacturer, if the vehicle was in autonomous driving mode and the accident was the result of its system not operating correctly.
This is an important development, says Barry Stevens, a senior technical underwriter at Zurich.
“It relieves the injured party from having to establish whether it was the driver or the car who was ‘driving’ at the time of the accident – and if it was the car, subsequently having to pursue a potentially costly and complicated claim against the manufacturer,” says Barry.
Another important change is that if the ‘driver’ of an autonomous vehicle involved in an accident was not physically driving it at the time, they too can claim against the motor insurer as just another passenger, which means they can be compensated for any injuries they suffer.
Until now, policyholders have not been allowed to claim against their own motor policy, even if the accident was due to component failure or faulty servicing.
Key considerations for driverless car owners
Even if a self-driving vehicle is in autonomous mode, an owner could still be held accountable for a collision, if it occurs as a result of a failure – either by themselves or another person they have allowed to use it – to understand the technology and operate it correctly, for example by not installing necessary software updates.
“Brokers should ensure their customers understand the capability of the car they wish to insure, and what responsibilities rest with them around safe use of the available technology and keeping any such systems up-to-date and operating effectively,” says Barry.
Changing trends in vehicle ownership
The introduction of driverless vehicles could affect motor insurance in other ways, too.
Patterns of vehicle ownership are already starting to change. Increasing numbers of new vehicles are being acquired via Personal Contract Purchase or similar arrangements, rather than bought outright or on finance.
With fully autonomous vehicles likely to be expensive, and hardware and software upgrades set to add to the cost, the trend towards leasing could accelerate.
“This could mean that the insurance model shifts from issuing policies to individuals and more to a fleet or business-to-business model, with manufacturers providing the insurance to companies as part of a wider package of services with the vehicle,” says Barry.
Whatever lies ahead for autonomous transportation, insurers will have a key role to play.
“We see a crucial role for motor insurers as enablers of change, and in supporting the adoption and use of autonomous driving technology,” adds Barry.
“Zurich is participating in a number of trials around the world in this space. Even if the ownership-and-use model for vehicles changes as a result of the introduction of self-driving vehicles, there will likely remain a need for cover against risks such as theft, weather and vandalism, as well as potentially new risks such as cyber-hacking.”
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