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Autonomous vehicles

Like it or not, here they come … fast

By Darryl Chidsey

Autonomous vehicles are no longer science fiction, and technology is quickly advancing to create vehicles that can drive themselves.

The National Highway Traffic Safety Administration recently adopted the Society of Automotive Engineers’ levels for automated driving systems, ranging from complete driver control to full autonomy. Under this system, levels range from 0 to 5:

  • Level 0 is driving the traditional way, with the driver in complete control
  • Levels 0 to 2 are active monitoring levels, meaning that the driver is still in control, but an aspect or two of the driving process has been automated
  • Levels 3 to 5 are more autonomous
  • Level 5 is full autonomous, with the driver controlling no aspect of the driving – the vehicle may not even have a steering wheel

Manufacturers are currently in the testing phase of level 3. Drivers are still necessary at this level but, under certain traffic or environmental conditions, are able to shift safety critical functions to the vehicle. According to predictions, the industry will reach level 4 in the next five years, with level 5 — fully autonomous — arriving by 2025.

Assuming these timelines are accurate, full company fleet evolution can be implemented as soon as 2040. So how this will change business as we know it today? Industry experts project it will take six to 10 years to significantly impact business. How will commercial auto insurance adapt? The industry will need to resolve many coverage questions. Who is liable, man or machine? Who owns the vehicle, an individual or a group? How will autonomous cars affect accidents? How will claims be resolved? These are just a few of the questions that need to be answered.

In a recent survey conducted by Insurance Services Office Inc. (ISO), many insurers responded with what they consider the top strategic and operational considerations regarding automated vehicles:

  1. Unclear determination of fault or other regulatory/legal issues
  2. Security issues such as cyber threats and privacy concerns
  3. Unclear future with respect to pricing, underwriting, claims handling, etc.
  4. Voluntary assumption of risk by auto manufacturers

As an industry, we must stay ahead of this emerging issue. Removing the driver from the equation will change how we look at future auto contract language. Perhaps the biggest question centers on the best way to insure these exposures. Will it look similar to current auto policies, or will it be better insured as a product liability exposure? Perhaps we will need to consider a hybrid auto/product liability cover. Even no-fault options have been discussed.

Much has yet to be determined regarding autonomous vehicles. We will need to be prepared to adjust as we figure what works best … and fast.

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