A recent ruling by a U.S. safety regulator helps clarify who is responsible for the actions of a self-driving vehicle while it’s on the roads. This is good news for insurers and other organizations eager to benefit from the emerging autonomous car business. It provides much-needed direction for participants in the industry and starts the process of rewriting regulations and legislation.
The arrival of autonomous cars in dealerships around the world has suddenly got a lot closer and the road ahead a little clearer. A U.S. safety regulator has acknowledged that the computer system that pilots a self-driving car could be considered the “driver” of the vehicle under federal law. A human being doesn’t have to be in the vehicle.
This ruling by the National Highway Traffic Safety Administration (NHTSA) was issued to Google early in February, according to Reuters. And it’s just what auto manufacturers, and many other participants in the autonomous car business, want to hear. It begins to clarify who is responsible for the actions of a self-driving vehicle while it’s on the roads. And it highlights the need to amend laws that hamper the commercial development of autonomous cars.
Federal regulations stipulate, for example, that vehicles must be equipped with steering wheels and brake pedals. Computer systems using artificial intelligence and a myriad of sensors to control their vehicles certainly don’t need such devices to perform their task. Google argues that such features could actually be hazardous, because they might encourage human passengers to try and override the computer system driving the vehicle.
Uncertainly about the laws and regulations that would govern the use of autonomous cars on public roads has hindered the progress of these vehicles. Auto makers and component suppliers, as well as tech firms eager to get into this market, have been in the dark about the safety standards that will be applied to their products. Insurers and other service providers affected by the emergence of the self-driving cars have struggled to define business models that address the changing, but as yet still vague, needs of motorists and vehicle owners.
The decision by the NHTSA is a small step. There is a mass of laws and regulations throughout the world that need to be changed to accommodate autonomous cars. But it is a step in the right direction. It provides direction for those involved in the industry and starts the process of rewriting the rules.
If the computer system piloting the automated car is recognized as the legal driver, then insurers can begin to develop risk management products for the developers of such technology. And, perhaps, for the auto manufacturers that install it in their vehicles.
As the advent of commercial autonomous cars moves closer, carriers can better prepare themselves for inevitable changes in the auto insurance market. These vehicles will be safer than today’s cars and accidents and claims are likely to fall. However, car ownership may start to decline as drivers share automated vehicles. This, together with the shift in responsibility from the driver or owner to the technology owner, could put pressure on premium income. Underwriting will also need to change as the quality of the technology, rather than the skills and track-record of the driver, becomes the primary factor in determining risk.
Furthermore, autonomous cars will create new business opportunities for insurers. The tremendous volume of data provided by these vehicles will enable carriers to cultivate much closers relations with their customers. It will also allow them to provide a broader range of products and services.
The NHTSA decision has accelerated the arrival of mass-produced self-driving vehicles on our roads. And insurers need to ready themselves.