As consumers faced with the opportunity to take a ride in a self-driving car for the first time, we may have a few questions. For example: is it safe? How do I take over the driving if something goes wrong? What happens if another vehicle hits me? But as insurance industry experts we are likely to have a few more questions, focusing in particular on risk, liability, the impact on pricing and the motor insurance market as a whole.
Between now and the point where driverless cars are the norm, a massive transformation is required in the current value chain. Insurance is just one element. Amongst the other changes: the Original Equipment Manufacturers (OEMs) hiring more software developers than mechanics; the aftermarket parts industry significantly decreasing due to the drop in accidents; OEMs taking more product liability and demanding genuine OEM parts and services.
We can also expect the creation of automated delivery services from providers such as Amazon.com®, which is partnered with Ford®, or RoboNeko in Japan. Volvo On Call customers can already get goods and parcels delivered securely to the boot of their car. The less mobile population – the young, the elderly, the less able, or less willing to drive – will be able to gain or regain independence.
There is also the big step where our roads become ‘connected’. Trials are ongoing in many countries into some exciting new automotive technology, including: the use of telematics like ours to identify breakdowns and accidents quicker (with their precise location); on-road technology, creating a ‘wi-fi road’ system, to wirelessly transmit the latest journey information directly to vehicles and potentially advise changing lanes or taking an alternative route.
Then there is the use of sensors to identify the condition of roads, bridges and tunnels on the network so that maintenance can be carried out as quickly as possible. These are all important innovations to support the successful integration of connected and driverless cars.
In the UK the industry consultation on insurance law and other regulations related to the driverless car closed on 9 September. Due to the similarity of their legal systems, the result of the UK government’s consultation will be of particular interest to some other countries like South Africa and India.
In many other countries insurance related to autonomous vehicle technology is still a legal grey area for now. In Germany the draft driverless law has been announced, although some lawyers argue that the legality of autonomous vehicles is dependent on the presence of a fully liable driver supervising them.
Amongst the main principles of the German proposal is that the car will always opt for property damage over personal injury and that when a human has removed his, or her, hands from the wheel the car’s manufacturer will be liable in the event of a collision.
Australia is undergoing a consultation similar to that in the UK, in a bid to head off a rush of legal claims.
The legal approach is becoming clearer in the US with the recent guidelines announced by the National Highway Traffic Safety Administration (NHTSA). It has produced a model state policy for individual states to follow, to avoid the issue of auto manufacturers having to conform to 50 different sets of rules.
The NHTSA has adopted the SAE International‘s five classifications of driverless vehicles from level 0 (the driver does everything) to level 5 (the car performs all the usual tasks a human driver can perform). Individual states are in different stage of passing their own laws, led by Florida, California, Nevada, Michigan and the District of Columbia.
Of course, all of these legal and technological changes will not happen overnight and the specific details cannot be predicted at this point given the rate of development in the autonomous vehicle market. We will have to wait and see.
Predicting the timescale of the move towards fully self-driving cars is a complicated business, made more complicated by the various classifications of vehicle and the various stages required. We are already seeing automatic braking and lane control becoming standard for new vehicles, and the next stage from there is ‘combined function automation’, relieving the driver with adaptive cruise control and lane centering technology.
Following this will be a stage with limited automation, where the driver gives full control of all safety-critical functions under certain conditions and will be required for occasional control.
And then comes the big step: to full automation. The driver will provide navigation or destination input, but is not expected to be available for control at any time, although the vehicle can still be operated by the driver, unless it is part of a public transportation system.
Changes will occur rapidly now that much of the technology is already available, accepting that many cars without any of this technology will still be in use for some time to come. Looking at manufacturer ambitions, we should see limited automated vehicles launch on public roads as early as 2017, and fully-automated cars some four years later.
So in an optimistic scenario where half of the new sales in 2025 consist of limited and fully automated vehicles, it’s likely we will still have to deal with the long tail of combined-function automated cars beyond 2035. We will therefore be in a hybrid market for a very long time to come. Telematics, specifically like ours from LexisNexis Risk Solutions company Wunelli, and machine-to-machine communications in general, are the building blocks that make all of this possible.
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