September 8th, 2016

Self-Driving Automobiles

Posted at 1:00 AM ET

Technologies that we may take for granted today such as anti-lock braking and airbag systems, driving and parking assistance, hazardous condition traction control and global positioning system routing, may soon all come together and evolve into fully autonomous self-driving automobiles. Self-driving cars are expected to begin commercial production and be in use by 2017. Google, the pioneer in the field, claims it can cut road accidents by eliminating the human driver who gets distracted by text messages or becomes tired. Although safety and efficiency gains have been the most cited and prominent benefits for the rationale for the development of self-driving automobiles, a considerable number of challenges remain.

Different types of technology will be operated in parallel to existing transportation options during their gradual implementation phases. Some key questions that arise are:

  • How will autonomous cars interact with human drivers on the road?
  • Who will be liable in autonomous car crashes?
  • How quickly will the personal liability of the driver shift to the product liability of the manufacturer?
  • What if automated systems fail to deliver or simply stop working?
  • Will humans be available and have the skills to take over control again as needed?
  • What are the increased data/privacy concerns as more sensors and recording devices are used in these vehicles?

It is also possible that some industries or parts of the population will reject this new technology, for economic or privacy reasons or simply a preference. Assuming regulators facilitate wide use of self-driving vehicles and the public accepts them, the speed of their implementation will depend on costs (including insurance), production capacity as well as the pace of transitioning away from current transportation systems. Relative to Unmanned Aerial Systems (UAS)/drone commercial implementation over the next 10 to 25 years, the shift to fully self-driving cars is expected to be much more gradual, impacting some transport segments quicker than others.

The inevitability of wide-scale autonomous mechanisms including UAS/drones and self-driving cars should not be underestimated. As with any opportunities brought about by advances in technology, they go hand-in-hand with a set of new and little understood risks, to which operators, regulators and the (re)insurance industry are all currently trying to comprehend, embrace and adapt.

Currently there are insufficient precedents set in terms of data, claims and overall knowledge in order to enable underwriters to accurately assess the numerous risks involved in autonomous vehicle operations. However, over the next few years, this data will eventually be generated (beyond these machines and their performance reliability) the hard way - via the emergence of complex litigation, insured and uninsured losses, albeit initially, at the smaller end of the scale.

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