Insurance companies can struggle to access the information they need to insure policies for autonomous driving cars.
For vehicles that are capable of self-driving in some situations but return control to a human driver in other situations, data is essential to determine whether the human driver or vehicle manufacturer was liable for an accident when settling claims.
“Given this dual-mode design and the ability to transfer driving responsibility, observing and recording the responsible party is critical,” said Jeremy Carlson, principal analyst and manager at S&P Global Mobility, via email.
When accidents happen, insurers have to use information held by vehicle manufacturers, which can be a tedious process.
“If the only way to get the data is after it’s been sprayed back to the engine manufacturer, who then sends it somewhere else to be translated, who then forwards it for a fee sometime in the future, that becomes a real problem,” said David Williams, former general manager of underwriting and technical services at AXA SA’s UK operations and currently chairman of the Association of British Insurers’ Autonomous Driving Insurance Group.
In some cases, car manufacturers may not be willing to send the data at all. Williams said automakers are trying to minimize the data they share because of concerns about privacy and cyber risks. But beyond those concerns, according to Williams, manufacturers may also be reluctant to part with vehicle location data because they believe they can make money from it.
“It’s going to be a long debate, I think,” Williams said.
In addition, the on-board systems of vehicles may not record the information that insurers need. Automated lane control systems, or ALKS, will likely be the UK’s first foray into automation in consumer vehicles. Cars with these systems can drive in one lane on highways themselves at speeds of up to 60 kilometers per hour.
According to a United Nations regulation, certain data from such vehicles must be recorded in on-board storage systems. But under current rules, vehicles will only record data for a “detectable collision”, which is usually the case when an airbag deploys.
According to Matthew Avery, head of insurance research at Thatcham Research, an insurance-funded vehicle safety center, such accidents are responsible for only about one in ten accidents. That means data for the vast majority of accidents is not recorded and available, which poses a major problem for insurers, Avery said in an interview.
Access to data will be key to insuring automated vehicles in other markets. U.S. legal and insurance systems will be able to adapt to automated vehicles, provided they have access to vehicle information to determine how accidents happened, Bob Passmore, vice president of the division, personal lines at APCIA, said in an interview. . Passmore said there is an existing federal-level framework that allows insurers to access information about event data recorders fitted to current vehicles for claims purposes.
“We think that expanding and adapting for a vehicle that is more technologically advanced is the right framework to follow,” passmore said.
Insurers will also need to identify the type of automated or driver assistance technology onboard a particular vehicle, which isn’t always easy, Passmore said. It was once possible to determine a car’s characteristics by its vehicle identification number, but this is not possible with features such as automatic emergency braking or adaptive cruise control.
Insurance companies have time to prepare for the arrival of autonomous vehicles, as liability could change the development of self-driving cars. Some automakers, including Volvo and Mercedes-Benz, have accepted liability when certain vehicles are in driverless mode, Carlson said. Other automakers may follow suit, which could discourage some from developing such level 3 automation capabilities.
“This is one of the reasons some automakers are deploying even more advanced automated features, even those similar to [Level 4] behavior, while requiring the driver to remain involved and supervise,” Carlson said.
While autonomous vehicles currently make up a negligible percentage of the total global market, this will change in the next decade. Vehicles with level 3 automation will account for 4.0% of global car sales by 2030, S&P Global Mobility projects, but accounted for only 0.004% of sales in 2021. Cars with level 4 automation, essentially making them self being able to drive by a human driver are expected to account for 2.2% of global sales by 2030. In 2021, such vehicles were not sold.
Give and take
Despite the challenges ahead, insurers say they would like more cars to have automated features as this will reduce accidents and claims.
“In general, we are very, very supportive of automated driving technologies,” said Jonathan Fong, policy advisor at the Association of British Insurers, in an interview.
However, a side effect of lower claims can be lower cover prices and lower premiums. In Japan, where vehicles with ALKS-like systems are already being sold, insurers are starting to wonder how they can make a difference elsewhere in that market. On average, Japanese insurers derive about half of their revenues from car insurance.
“It is clear that the insurance market will contract as a result of the advancement of the self-driving system,” said a spokesperson for MS&AD Insurance Group Holdings† “We need to move beyond insurance to a technology field.”
Tokyo Marine Holdings Inc. in January took an undisclosed minority stake in US startup May Mobility, which specializes in developing automated vehicle software. A month later, Sompo Holdings Inc. an insurance product for companies developing software for commercial automated vehicles. Sompo’s first customer is Tier IV, in which it has an 18% stake. The insurer plans to offer the product to other software companies in the future.