It may be 10 years or more before fully autonomous vehicles start rolling out of dealers’ showrooms in large numbers and heading for the open road, but the prospect of a commercially available driverless car in the not-too-distant future has captured the public’s imagination like few technologies have managed to do in recent years.
The hype has a lot to do with test vehicles already on the streets of some of big U.S. cities including Mountain View, California; Austin, Texas; Kirkland, Washington; and Phoenix, Arizona, where Google’s self-driving cars have already racked up more than two million miles.
In Pittsburgh, the ride-sharing service Uber recently launched a pilot project that dispatches self-driving cars to transport real clients. An Uber engineer and a backup driver sit in the front seat ready to take over the controls if necessary.
And with companies like Ford, General Motors and Mercedes working on their own autonomous prototypes, a future in which self-drive cars become the norm seems all the more plausible.
But like all new technologies, there are practical challenges to deal with, and when it comes to driverless vehicles, insurance is potentially one of the biggest.
Doug Grant and Patrick Vice, partners at Insurance-Canada.ca Inc., a Toronto-based organization that provides consumers and insurance professionals with independent information about technology and the business of insurance in Canada, say that the insurance industry is watching the evolution of autonomous vehicles very carefully.
“From what we’ve seen so far, particularly with Google’s vehicles, this is a very safe technology,” says Mr. Grant. “There have been very few incidents and, with one exception, the vehicle was not at fault.”
Mr. Vice agrees, adding that by and large the feedback he gets is that the development of autonomous vehicles is proceeding according to plan. He points out that there are an increasing number of manufacturers providing vehicles available with advanced driving systems.
“Some vehicles – Tesla being one – will do almost everything, but there still is a steering wheel and you can take control when necessary, so the insurance industry does have some experience on the path towards fully autonomous cars,” he says.
Mr. Vice adds that determining liability in an accident involving a fully autonomous vehicle where the passengers have no control over the operation of the vehicle will probably be determined by an analysis of the vehicle’s data recorder.
“It could end up as a case of whether or not the control systems in the vehicle were deficient as opposed to an action of anyone in the vehicle,” he says.
Of course, autonomous vehicles are not the only new technology challenge facing insurance companies. The growing use of drones for both business and recreational use has also opened another frontier for the sector.
Mr. Grant says insuring drones needs to be viewed from three perspectives: coverage of the hardware itself in the event of an accident; coverage of any load the drone may have been carrying for delivery to a customer at the time of an accident; and liability coverage for any damage or injury that may be caused by a drone.
The liability aspect is becoming increasingly significant with incidents such as the emergency diversion of a Porter Airlines plane this week, possibly due to a drone on the approach path, Mr. Grant added.
“One of the challenges is that regulations governing the use of drones are either non-existent or unclear, so insurers are unsure of what they should cover,” he says. “As with most new technologies, there is also very little information about claims experience, so insurance companies don’t always know what to insure or how much to charge for insurance.”
Mr. Vice says self-drive vehicles and drones need to be seen as just two of the many new and rapidly evolving technologies challenging a wide range of stakeholders including regulatory groups, manufacturers, technology developers, the public and insurance companies.
“All of a sudden, the relative risk changes and the implications need to be assessed – and this is just the start,” he adds. “Technology is set to take off in the years ahead in ways that most of us can’t even imagine, and it will have insurance implications, both for insurers developing product to meet customers needs and for those using new technologies and requiring appropriate insurance.”
Mr. Grant agrees. “Insurers need to know the risks involved in using these new technologies, and some companies are now using advanced technologies, including artificial intelligence, big data, machine learning, etc. instead of relying exclusively on past claims history. That way insurers can respond better to consumer requirements and business needs,” he says.
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