Autonomous cars present a new set of challenges for insurers

The big question raised by driverless vehicles is who will be liable for an accident when a vehicle is in control, as opposed to a human driver? Under the UK's Automated and Electric Vehicles Bill, which is currently making its way through Parliament, insurers will be liable for any damage caused while an insured vehicle is driving itself. If the cause of the accident was the vehicle technology it will then be up to the insurer to recover anything paid for the claim from the manufacturer.

This sounds straightforward but grey areas remain. What if an accident happens because an insured person has failed to install necessary software updates to a vehicle, or made unauthorised modifications to the vehicle's software? Or if he negligently allows the vehicle to be in autonomous mode when it is not appropriate? In situations like these the insurer could avoid liability for a claim or reduce the amount that it pays.

Cyber risk and terrorism

A potentially big concern for insurers and manufacturers is cyber risk and terrorism. The consequences of a hack on an autonomous vehicle could be devastating – thefts on a large scale, kidnap and ransom, the reinvention of ‘crash for cash' insurance fraud schemes and even autonomous vehicles used as weapons in a similar way to the van used in the June 2017 London Bridge terrorist attack.

Motor insurers do not need to cover illegal use of vehicles at present. However, if insurers do not extend motor policies to cover cyber and terrorism then these risks may have to be insured separately. In a world of increasing interconnectivity, insurers and manufacturers will need to work together to find the right balance between technological innovation and cyber security.

Satnav failures

The technological infrastructure which is required to enable the safe and efficient use of autonomous vehicles is going to be vast. This presents an opportunity for casualty and specialty insurers. Motor insurers will be expected to cover claims, at least in the first instance, as a result of accidents caused by a satellite failure or outages that affect a vehicle's navigation systems. However, those motor insurers are then likely to seek reimbursement from the vehicle manufacturer who may, in turn, make a claim against their own insurers.

Telematics

Telematics will perform a key role for insurers in helping them to calculate how well autonomous vehicles, produced by different manufacturers, perform whilst in autonomous mode and the risks presented by them. This will enable insurers to calculate premiums. If your autonomous vehicle's technology delivers a ‘competent' drive then the insurance premium may be higher than for another manufacturer whose autonomous technology delivers an ‘impeccable' drive with fewer accidents.

Telematics will also play a key role in dealing with claims by helping to identify the cause of an accident. Until we get to the stage where vehicles are fully autonomous this will be of particular importance in identifying whether a failure to take back control of a vehicle by a human driver has caused or contributed to a crash.

Views in the insurance industry following the first pedestrian death

Following the death of a pedestrian crossing the road in Arizona some insurers have adopted a cautionary approach, at least until the investigations have been concluded. Uber itself has suspended all testing of self-driving vehicles following the accident.

A key question this incident raises is what ‘standard of care' is expected of a vehicle when it is in autonomous mode? If the conclusion is that a reasonably competent human driver couldn't have avoided the crash then it would seem unfair to apply a higher standard of care for autonomous vehicles, and certainly whilst the technology is still in its relative infancy.

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