Deborah Newberry and Karishma Paroha from Kennedys examine how autonomous vehicle technology will impact commercial motor policies and look at the implications of liability possibly moving from drivers to manufacturers
In June 2017, Kennedys published key findings from the first major piece of research into public attitudes on driverless vehicles. The findings demonstrate how traditional models of compulsory motor insurance will need to change as liability shifts from drivers to manufacturers.
In identifying the issues stakeholder groups need to address to make such new vehicle technologies a reality, the impact on commercial insurers is becoming clearer.
Overall, based on a survey of 1,000 people, only 44% of UK adults support the use of driverless cars and there is still a widespread view that humans exercise better judgement than computers. Road safety concerns are the main reason among non-supporters and public concern is greater when considering driverless commercial vehicles.
Despite the concerns about safety, respondents could also see the benefits, for example with disabled people maintaining their independence. In terms of insurance, lower insurance premiums over time was another benefit. The report also suggested the major impact on insurance of changing car-use habits. Though still some distance in the future, already 13% of respondents envisaged that would mean taking out insurance on demand, rather than an annual policy.
The expected shift in liability from driver to manufacturer is significant.
Currently, if there is a motor accident, liability will lie with the driver of the vehicle (be it rented or owned) if it can be proven that the driver was negligent. However, where an accident occurs as a result of a fully autonomous vehicle and with no human error involved, it follows that liability will shift from driver to manufacturer, who will have responsibility for programming the software and producing the vehicle. Indeed, in 2015, Volvo publicly stated that it would take legal responsibility for accidents caused by its automated vehicles, if an accident is a result of a defect in its technology, provided that the handover is conducted properly and the car has not been misused.
However, for as long as humans actually sit in autonomous vehicles, causation will remain a live issue. Circumstances will occur which question who was responsible for a vehicle failure that results in an accident or injury – the driver or the vehicle?
In a scenario where an accident involves a partly autonomous vehicle, the potential liability matrix will be even more complex. If, for example, a distracted driver fails to activate manual mode in an emergency and where the autonomous technology appears to be faulty, is the manufacturer still responsible?
If liability is assumed to rest with the manufacturer, determining who is responsible for the accident will become extremely important for the manufacturer. This is why accident data recorders such as black boxes in the autonomous vehicles are likely to be standard. Furthermore, insurers may encourage drivers to use dashcams or smartphone recorders when driving.
This shift in liability could affect many companies in the manufacturing supply chain including software developers, software providers and telecoms service providers. Each company and their insurer will need to be aware of their potential exposure to liability claims. Furthermore, design or manufacture failure that results in serious motor accidents are likely to:
- Increase the need for automotive product recalls
- Carry damaging reputational risks for the manufacturer
- Carry risks of criminal penalties for offences such as corporate manslaughter, in some circumstances
There is a lot for insurers to talk about. As well as addressing the change in insurance needs where premiums are intrinsically linked to vehicle safety, insurers of autonomous vehicle manufacturers will need to educate their customer to ensure such manufacturers:
- Have manufacturing and operating procedures in compliance with the UK’s strict consumer protection legislation
- Have clear risk management and contractual arrangements with suppliers to manage these obligations effectively
- Consider ways to limit liability through their agreements with automotive customers
- Review their post-sale monitoring of their products and approach to managing liability issues
- Review the efficiency and effectiveness of their product recall procedures
- Provide their own customers with clear user guidance and instructions as well as maintenance and servicing requirements for their products
Deborah Newberry is head of public affairs and Karishma Paroha is a solicitor at Kennedys