Kirsty Yuill: Technology is changing the insurance landscape
No matter if it’s motor insurance or employers’ liability policies, everyone from customers and their brokers through to insurers and their underwriters needs to be aware of how technology will affect their businesses.
Firms such as Google and Uber have been running trials of driverless cars for many months. The days when haulage lorries are driving themselves along the motorway, albeit occupied by human “drivers”, are already upon us. These advances in driverless cars – or rather automated vehicle technology (AVT) not to be confused with truly autonomous vehicles (capable of operating independently of any human control) – raise many questions for insurers. Who is liable if the vehicle is driving itself and is involved in an accident? What affect will AVT have on the number of claims arising from road traffic accidents?
If an automated vehicle is under human control when an accident occurs, the ordinary considerations of negligent driving will still apply. What, though, if an accident is due to some internal issue when the vehicle is driving itself? Should there be a difference if the accident is due to an external factor, such as black ice, for example? What role should product liability law play?
These are complex questions and could potentially give rise to long, expensive disputes. That said, the Westminster Parliament’s Automated & Electric Vehicles Bill (which will also apply in Scotland) deals with many of these issues and attempts to minimise areas of dispute. Its solution is to extend compulsory motor insurance to cover automated vehicles driving themselves. This will mean motor insurers will, much as at present, deal with claims from people injured on the roads, including by vehicles driving themselves. It will then be up to them rather than the injured person to claim against manufacturers if the harm was due to the vehicle.
The wider legal issues raised by automated driving such as: safety assurance, MoT testing, criminal liability, cyber security and use within public transport – are to be examined jointly by the Scottish and English Law Commissions. Their research began last month and is scheduled to run for three years.
The impact of driverless cars on personal injury claim numbers and claims handling remains to be seen but, if they fulfil their potential, AVT could all but eliminate road traffic accidents.
Transport isn’t the only sector for which insurers will be caught in a race to keep pace. Technology’s rapid advances mean product liability policies will be put to the test for everything from wearable and implantable technology in healthcare through to fridges that are connected to the “internet of things” so they can reorder milk automatically. With the supply chains for such products stretching across continents – not to mention a new breed of service company springing up to maintain such technology – questions over liability could become more complex.
There will also be a rise in technology-specific claims. For example, cyber risks are no longer simply about security – technology also plays a role in product safety and if a product is controlled or influenced remotely then the security of devices becomes a matter of satisfactory quality, which could be challenged by users; not something that the framers of the Sale of Goods Act – or indeed the Consumer Rights Act – may have envisaged.
It’s not just headline-grabbing issues like driverless cars and self-replenishing fridges that are in focus . Even employers’ liability insurance may need to be revised in the face of more people becoming ostensibly self-employed contractors displaced by automation.
Amid all these emerging risks, technology also presents opportunities for insurers. As machines replace humans, a host of new insurance policies will be needed. More and more programming is bound to lead to an increased need for insurance cover.
While HAL and the Cybermen aren’t peering over our shoulders yet, the emerging risks posed by rapid advances in technology are enough to keep insurers, brokers and underwriters busy for the foreseeable future.
Kirsty Yuill is an Associate with BLM