AV Adoption Raises Complicated Insurance Issues

While research indicates autonomous vehicle technology will lead to fewer accidents, the growing possibility of more AVs on the road is raising complicated questions around insurance liability questions and how best to develop policy frameworks.

These were among the conclusions of a white paper issued by the Travelers Institute, the public policy division of The Travelers Companies.

The paper argues any legal and regulatory structure concerning AVs must include insurance-specific components, including standardizing data governance and cybersecurity requirements.

Sharing data with insurers could enable appropriate insurance coverage by helping establish liability in the event of an accident, and also contribute to risk mitigation and control measures. This could be done through software updates, for example.

The report also backs the use of advisory boards and task forces made up of private and public sector experts to help inform AV policymaking, making sure the insurance industry has a seat at the table.

“Insurers will have unique and valuable insights into several of the key issues that will likely arise from AV technology, such as risk assessment and mitigation, big data analysis, the functioning of comprehensive liability regimes and navigating state-federal coordination issues,” the report noted.

The study also cautions that while fewer accidents will occur with more (or all) AVs on the road, incidents that do happen could potentially be more costly, particularly with respect to vehicle damage.

The cost associated with fixing a 2018 car model can be as much as three times higher than the previous 2017 model, primarily due to the collision avoidance technology in the front grill and bumper of the newer design, according to Travelers claim data.

“With the increasing adoption of semi-autonomous vehicles and the potential for fully autonomous vehicles, several policy-related questions and challenges are beginning to emerge,” Michael Klein, executive vice president and president of personal insurance at Travelers, wrote in a statement. “It’s important that the insurance industry play a central role in policymaking discussions to develop a uniform legal and regulatory framework for autonomous vehicles.”

Increasingly automated cars are raising questions about liability and risk even as telematics — from both smartphones and onboard devices — are starting to give insurance companies more insight into how policyholders drive and sometimes allow for lower premiums.

A June survey by J.D. Power found more than one third of all consumers would switch insurance carriers to get a discount for having driver assistance features in their cars.

If their insurer doesn’t give them a break for buying cars with advanced driver assistance features, 40% of those surveyed responded that they definitely or probably would switch to one that did, according to the report.

A similar report released in March — also from J.D. Power and law firm Miller Canfield — surveyed more than 1,500 drivers on the practical implications of litigating ADS product liability claims. It found more than half — 51% — of consumers would pursue litigation for a fully automated, Level 5 vehicle if it was involved in a collision and caused an injury.

A year ago, Travelers created a partnership with TrueMotion, a provider of smartphone usage-based insurance technology, to implement the IntelliDrive app, which allows customers to better understand their driving habits and get auto insurance priced according to how they drive.

— Nathan Eddy is a filmmaker and freelance journalist based in Berlin. Follow him on Twitter @dropdeaded209.