May 5, 2016 by Canadian Underwriter
Clear determination of responsibility is essential to ensuring effective insurance coverage of driverless vehicles, but the “next 10 years may have less clarity about responsibility than the past 40 or 50 years,” according to a new report released on Thursday by the Insurance Institute of Canada.
The report, titled Automated Vehicles: Implications for the Insurance Industry in Canada, is a “call to action for Canada’s insurance industry to become engaged in discussions with automakers, regulators, and others who will influence the introduction of semi-automated and self-driving vehicles in Canada, and to become a champion for the expected reduction in traffic fatalities and serious injuries.” In particular, the report explores how vehicle automation is anticipated to affect road safety, claims, road infrastructure, insurance premiums and policy coverage over the next decade. [click image below to enlarge]
Automated Vehicles: Implications for the Insurance Industry in Canada is structured around several “critical questions,” including:
“A challenge for the insurance industry over the next 10 years will involve determining who is responsible for collisions,” the report said. “Conventional vehicles will share the roads with semi-automated vehicles and the first self-driving vehicles. Personal liability for most collisions will begin to shift to include a mix of personal and product liability.”
According to the report, over the next five to 10 years, conventional, non-automated vehicles will continue to account for most of the cars and trucks in Canada. While the frequency of collisions resulting in serious injuries and vehicle damage will decline for new, semi-automated vehicles, this will be offset by the expected higher cost of repairs for vehicles that experience collisions. As a result, the impact of vehicle automation on insurance claims costs and industry revenues will only begin to emerge over the next 10 years, relative to the significant disruption expected over the next decades, the report said, adding that it is important for the industry to begin now to prepare for the extensive changes vehicle automation is expected to ultimately bring for the industry.
“There is the potential for the insurance industry to step up as a champion for the safety benefits that may flow from the appropriate use of vehicle automation, as the industry did with graduated licensing, the fight to eliminate drinking and driving, use of seat belts, and a number of other road safety measures,” the report said. “This is a critical time for the insurance industry to become engaged in the discussion about vehicle automation, and to champion the remarkable potential to reduce traffic fatalities and serious injuries.”
The report, the second in a series of Emerging Issues Research Reports by the institute, is authored by Paul Kovacs, founder and executive director of the Institute for Catastrophic Loss Reduction and president and CEO of the Property and Casualty Insurance Compensation Corporation. It concludes with seven recommendations to help the insurance industry prepare for semi-automated and self-driving vehicles:
Peter Hohman, president and CEO of the Insurance Institute of Canada, said in a statement that “the road safety benefits of the new technologies are welcome, and the insurance industry has just started to discuss how to adapt to the transition towards completely driverless vehicles. Our report provides valuable analysis and information in support of moving that conversation forward.”