The Ford Model T is recognised as the first affordable automobile that opened the door to driving for the masses in the early 20th Century. The most disruptive innovations don’t happen overnight and will lead to wider market disruptions opening new challenges in terms of laws, regulations and safety. We are currently on the cusp of another huge change to our society that will see autonomous and driverless cars become available to the masses. Driverless cars have been in the public conscience for years as a futuristic sci-fi concept seen in Knight Rider, Total Recall and The Minority Report, to name just a few. Now, with the major motor companies and huge multinational companies like Google and Uber investing millions in the research of driverless cars, they are inevitable. While the potential benefits in terms of safety are huge, there is, like with the Model T, a large body of work to be completed to make sure this innovation is the revolution it has the potential to be.
How do Driverless Cars Work?
Driverless cars use a variety of techniques to detect their surroundings including radar, GPS and LiDAR (A surveying method that measure the distance to a target by illuminating it with a laser). Their control systems are capable of analysing sensory data to distinguish between cars on the road.
As of February 2017, automated cars permitted on public roads are not yet fully autonomous. “Driverless” is a bit of a misnomer, a person is always required to be seated in the driver’s seat, at least for the foreseeable future.
A Faster Horse
While Henry Ford famously identified the desire of his customers to want “faster horses” the desire of the modern driver must be safety. 94% of all road accidents are caused by human error; the introduction of increasingly automated vehicles could have a hugely positive effect on road safety with the potential to dramatically reduce deaths and injuries and could completely change what we think of as public transport.
Furthermore, the impact of driverless cars on the life of people with mobility issues should not be downplayed, it could revolutionise their lives.
Driverless cars will reduce the level of accidents, injuries and the incidence of theft.
Work to be Done
Driverless cars as an emerging technology is not without issues and flaws, highlighted starkly with the fatal Telsa crash in 2016. The importance of improving these technologies cannot be understated. Current flaws show the environment the car is in to be particularly challenging for autonomous technologies. Heavy snow and rain can confuse LiDAR, poor lane and road markings make it very difficult for the car to drive safely, while GPS can be confused by bridges. This poses the question, what unique risks will partial and full automation create? It also raises legal, privacy and insurance questions!
The Insurance Industry’s Role in Normalising Driverless Cars
Automobile driving is over 100 years old, in this time we have developed an understanding of the unique situations that drivers face. Driverless cars are like to bring about new unique situations that driverless cars face, leading to a significant change within the insurance industry. It will have a key role in helping to give confidence to the public to use these vehicles when they become readily available. This technology will fundamentally change the nature of road safety and how motor insurance is sold.
We expect that consumers will embrace driverless cars, maybe more so than what the insurance industry is expecting. Therefore, it is important for insurers to figure out how insurance will work with this new disruptive technology. How will driverless cars be regulated? Especially when they meet a traditional car out on the roads. Will “drivers” in the future need a driving licence.
Insurers will not be standing in the way of the development of driverless cars. In fact, they are on the frontline actively looking to support progress and innovation.
Who is to Blame if a Driverless Car gets in an Accident?
An important question to ask from an insurance perspective when it comes to driverless cars is: Who is at fault when a driverless car is involved in an accident? – drivers, manufacturers, system developers, car dealers, car maintenance firms or a combination? The relationship between the insurer, those involved in the accident and, now, the manufacturer will become more important.
Insurance regulators in Europe offer a solid enough foundation for insurance of driverless cars. Even where you think new rules would have to be invented, they have already been implemented. In most European markets vehicle holders are liable for every incident resulting from the vehicles operations.
It is mandatory to carry insurance to protect the holder and driver from third party claims, with a primary insurer paying for the claim, regardless of whether it stems from a manufacturing defect or a driver error. These same philosophies could carry over into an autonomous drive situation as well.
Event data records could come into play when trying to determine who was in control of the vehicle in the case of a self-driving car. However there are legitimate privacy concerns that need to be addressed. There needs to be clarity on the data that is captured and how to transfer it in the case of a claim. It’s important to know exactly how data from individual vehicles will be recorded and used to improve safety and clarify liability.
In fact, it is insurers (like the UK’s Adrian Flux, who are designing policies for Driverless Cars) who are leading efforts to have a standard set of data agreed at an international level which would be easily available in the event of an accident involving an automated vehicle. This data would cover a period from 30 seconds before to 15 seconds after an incident and would include an indication of whether the vehicle was operating autonomously or not, and what technology was in use.
If a driverless car is involved in an accident liability may not lie with the car owner, but the manufacturer. This is a big change and may cause some traditional personal insurance products to evolve into commercial liability products.
When driverless cars become the norm there will be a lot of complexities introduced to the insurance industry. However, it may result in savings for consumers. Experts are saying that insurance premiums could drop at the introduction of autonomous cars as they will actually be safer.
As in the initial years of the 20th Century political, legal and societal changes allowed the Model T to become a success. At the beginning of the 21st Century we must make sure we take the necessary steps to ensure autonomous driving reaches its potential, driving an era of safer motoring. Allianz plans to be prepared for when that change comes.