As the UK takes a leading role in the autonomous and driverless car race, some of the largest insurance companies in the country have come together to tackle the changes needed to ensure cars are safe and comply with regulations.
In total, 11 companies have entered into a joint venture to represent the insurance industry while the central government makes its decisions on how to deploy driverless car technology on British roads.
The alliance, led by the Association of British Insurers (ABI) and Thatcham Research (TR), has been formed to consider issues relating to automated driving on UK roads, particularly concerning insurance and liability.
The Automated Driving Insurer Group (ADIG) will feed into ABI policy and work with the government around how to embrace automated vehicle use in the UK.
The group consists of representatives from eleven UK motor insurers including Admiral, Ageas, Allianz, Aviva, AXA, Co-operative Insurance, Covea, Direct Line Group, LV, Zurich and the Lloyd’s Market. It will be chaired by David Williams, head of underwriting at AXA.
The ADIG has already identified issues surrounding driverless cars, including who could be held liable after an accident and how to cope with vehicles at different levels of automation. Concerns have also been raised over how data from individual vehicles will be recorded and used to improve safety and clarify liability, and whether there needs to be changes to existing road traffic laws and what those changes might be.
An ABI spokesperson told CBR: "This group will consider key issues related to automated vehicles such as liability and how they will be insured, to provide opinions and reports to help shape future legislation and practices.
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"Its work will be feed into the ABI’s own committees but we also expect it to be of use to other interested parties such as the Department for Transport."
James Dalton, director of general insurance policy at the ABI, said that contrary to what some people might expect, insurers are not standing in the way of this development but actively looking to support progress and innovation.
Dalton said: "Truly driverless cars have the potential to dramatically reduce deaths and injuries on the roads and could revolutionise what we think of as public transport. The role of motor insurance in such a future will be very different to what it is today, but insurance will be part of the picture."
Caroline Coates, head of automotive at DWF, said that while the introduction of connected and autonomous vehicles onto UK roads is unlikely to reduce or remove the need for insurance entirely, the exact nature of the insurance cover that will be required will depend on how the law evolves.
She told CBR: "Even if the legislation continues to require a human driver to remain at the wheel – which is likely at least during the near future while many different types of vehicles equipped with differing levels of technology occupy the same road space.
"It is questionable whether ultimately he or she can still be deemed fully responsible for the control of their vehicle. At some point this is likely to be challenged and a collision blamed on vehicle error."
Driverless vehicles have been hailed by several in the industry for their benefits both from the driver’s safety perspective to the energy consumption.
However, as cars get more intelligent, that is expected to result in a reduction of accidents, which today sees 94% of accidents caused by human error.
According to TR, even with today’s technology, including sensors, cameras and real-time driving warnings, a vehicle is 25% less likely to be involved in a serious or fatal crash.
Such technologies can help reduce the number of parking crashes, which in the UK account for 23% of all insurance claims, topping up to £1.7 billion. 71% of parking accidents occur during reversing.
As driverless cars are set to take to the road between 2020 and 2025 and mass adoption to reach its peak by 2040, auto insurers might shift the core of their business model, focusing mainly on insuring car manufacturers from liabilities from technical failure of their AVs. This as opposed to protecting private customers from risks associated with human error in accidents, according to McKinsey.
The change could transform the insurance industry from its current focus on millions of private consumers to one that involves a few OEMs and infrastructure operators, similar to insurance for cruise lines and shipping companies.
While in 2014 the UK’s private motor insurance underwrote £8 billion in premiums, these figures could tumble with the introduction of smart driverless vehicles. Premiums could shrink as much as 50% by 2025 and 80% by 2040, according to TR.
The UK has over the last year assumed a position in which it wants to play a strong role in the driverless car revolution. In summer 2015, the government’s Department for Transport in consultation with the UK Autodrive Consortium, Venturer and GATEway consortia, launched the world’s first code of practice for driverless cars.
Downing street has also invested £20 million towards driverless car technology and development. Documents last December have also shown that the UK government has held up to five face-to-face meetings with Google to discuss driverless cars.
Nick Reed, academy director at the Transport Research Laboratory, told CBR: "The speed of adoption of smart cars will be dependent upon a number of factors including overcoming technological challenges, establishing road safety implications, enabling the infrastructure to support connected vehicles, and clarity over legal and insurance requirements."
