NEW technology raises questions for insurers, writes Nick Rogers
Driverless cars sound like something from the distant future, like meals that you can swallow in a single tablet or robots that can do the washing and the ironing for you. Yet driverless cars may be closer than you think; the days of Kitt, the intelligent car from David Hasselhoff’s 1980s television series Knight Rider, are drawing ever nearer.
In February, the UK government gave the green light for driverless cars to be tested in Bristol, Coventry, Greenwich and Milton Keynes, with the first test vehicles due to edge out onto the streets thanks to £19 million of taxpayer funding. Google aims to have its self-driven prototypes on the roads in 2017, while Mercedes Benz has already unveiled its “Future Truck 2025”, which could on the autobahns in the next decade.
Globally, analysts at research firm IHS estimate that 230,000 autonomous vehicles will be on the roads by 2025, while the figure is forecast to accelerate to more than 11 million by 2035, with 20 per cent of those machines on the roads of Western Europe. A review of the UK’s transport legislation is due by mid-2017, focusing especially on those laws framing civil and criminal liabilities.
One of the questions with which politicians and then insurers and the courts will have to grapple is what constitutes a “driverless” car? In the United States, the National Highway Traffic Safety Administration has classified vehicles on a five-point scale, where current vehicles – with aids such as assisted parking and cruise control – count as “zero” and full automation with no help from a passenger reaches “four”.
Matters will be complicated even further during the transition years when there will be a mixture of manually driven, partially automated and fully automated vehicles all jostling for position on the carriageway. Indeed, some drivers are likely to hang on to their “old-fashioned” cars, enjoying the thrill of driving.
Driverless cars will change the face of the motor insurance industry for consumers and companies alike. At present, more than 90 per cent of accidents are attributed to driver error, and vehicle insurance is compulsory. Significantly safer roads and a greatly reduced number of accidents are likely to dramatically reduce the cost of driver insurance. Instead car insurers will look at the safety record of the vehicle or its manufacturer as a guide. Fewer accidents will mean fewer claims and lower premiums. Without doubt there will also be a beneficial knock-on effect in the area of personal injury, with fewer claims and a greater ability to detect fraudulent claims.
If in time the popularity of driverless vehicles leads to more car sharing then that in turn will lead to different policies, possibly with shared ownership. There are also numerous commercial vehicle applications to be considered and insured.
Measuring risk will be a key factor for insurers. Although the technology will have been tested, driver behaviours will not, meaning that statisticians will have to redevelop their understanding of the potential risks. Liability when it comes to accidents will also be called into question; the manufacturers of the driverless vehicles are likely to shoulder a far greater portion of the burden, along with the companies that produce the devices that cars will use to communicate with each other on the road and with the surrounding infrastructure, so that they can determine the speed limit and other crucial data. Cases could become complex, with manufacturers, passengers, other drivers, infrastructure providers and data companies all involved.
With driverless cars handling so much telemetry – whether it’s from high-tech road signs electronically advertising speed limits or about the road and weather conditions – there are also issues for insurers to think about when it comes to handling and securing so much information. The threat of cyber-attacks will be very real, with insurance companies required to play their part in avoiding the scenario of interconnected cars being interfered with by hackers.
Driverless cars are on the way and the impact for the individual motorist is becoming clear. As we become more accepting of sophisticated technology in our daily lives, there is no reason not to think we will also be ready for cars that are better drivers than we are, with all the benefits that brings.
• Nick Rogers is a partner and head of the motor group at risk and insurance law firm, BLM www.blmlaw.com