Self-driving cars are coming. In fact, Tesla Model S owners woke up on the morning of October 15, 2015 to discover that a software download to the cars has made them capable of steering and changing lanes at high speed, slowing and stopping, and self-parking, in “Autopilot” mode. The future is now, and self-driving cars bring with them a host of unanswered questions relating to safety, liability, and the insurance for protecting against liability.
Over the next few months we’re going to produce a series of articles looking at issues affecting insurance raised by autonomous vehicles, and how those issues may develop and change as the degree of autonomy – and the number and types of autonomous vehicles on the roads – grows. For many years the insurance industry has been a prime mover in the field of vehicle safety. One of the main concepts behind the drive to develop autonomous vehicles is to reduce crashes, particularly ones that result in serious injury. 95% of fatalities from car crashes result from human error. How will the insurance industry keep up, and how will it adapt to the changing scenarios?
Most people are aware that there are already self-driving cars on the roads. Some of these are from tech companies (Google being perhaps the best known); others from car manufacturers – Daimler (the parent of Mercedes) is currently testing both self-driving cars and tractor-trailer units. It is going to be some years before fully autonomous vehicles take over our roads; however, many of the cars we drive today have the modest beginnings of such systems. Lane control, skid control, adaptive cruise control, pre-collision braking, and seat belt and blind spot assist systems are existing parts of the fully autonomous technology that will someday take over driving duties from humans. Many of these systems seemed impossible only 20 years ago. Now several of them are standard equipment on even mid-level imports. And they are already reducing the number of injury and non-injury accidents.
Cars are becoming much more complex. Software already runs many engine, transmission and suspension functions. The lines between the different types of engineers needed to service them are blurring. And as the technology progresses, many others lines – including lines of insurance – will get blurred too.
Currently, car manufacturers are charged with making mechanically safe vehicles. Owners are charged with maintaining them safely, mechanics and repairers are charged with performing that maintenance correctly, and drivers are charged with driving them safely. Everyone involved at each stage has (or should have!) liability insurance.
Ultimately, when cars and trucks are all self-driving and fully autonomous, the car manufacturers will have a much bigger piece of the potential liability pie. The “driver” will be the technological systems and the software supplied by the vehicle manufacturer. Whereas most accidents today are caused by driver error, the responsibility for accidents will fall much more on the car manufacturer. Leaving aside for the moment the issue of what happens if an owner or “driver” somehow hacks the driver systems, or the issue of maintenance, ideas are already being considered for “no-fault” insurance for the driver and expanded products liability insurance for the manufacturers to compensate for this shifting liability burden. Other ideas being discussed include a simple fund (similar to the federal National Vaccine Injury Compensation Program) to compensate accident victims.
But how will we get from here to there? Semi-autonomous vehicles (ones that still demand some driver attention and input) are likely to be available to consumers in less than 10 years. Fully autonomous vehicles are likely further away (though some estimates put it as soon as 20 years). The turn-over rate for cars is about 11% each year. Even if that pace accelerates with the introduction of new technologies, there is going to be a considerable period when semi-autonomous vehicles have to co-exist with traditional, driver controlled ones. Further down the road there will also be a considerable period of time when fully autonomous, semi-autonomous and traditional vehicles all have to co-exist. How will vehicle codes and traffic laws change and adapt? If an accident occurs between a traditional vehicle and an autonomous one, will there be a presumption that the driver was at fault? What will happen to insurance during these lengthy transition times? Will all states move at the same pace in updating vehicle codes and financial responsibility laws, and how will that affect drivers crossing state lines? Will “drivers” who grow up on semi-autonomous vehicles have the skills to take over if something goes wrong?
One thing is certain: the road to fully autonomous vehicles is a long one, and it will undoubtedly have some bumps and unexpected turns. We’re going to look at a number of the issues presented and how they impact insurance in more depth in the following articles.