“In the distant future [legislators] may outlaw driven cars because they’re too dangerous” predicted Tesla Motors co-founder and CEO, Elon Musk, at the recent annual conference of San Jose technology firm, NVidia, adding that, “you can’t have a person driving a two-ton death machine.”
In light of statistics showing 93% of all motor vehicle accidents being caused by human error, the move towards automation in the hope of increasing safety seems inevitable. Indeed, the march towards increasing automation in motorized vehicles has been going on for decades. Satellite navigation, cruise control and anti-lock braking are just a few of the activities, now automated, that were once the exclusive domain of the human driver. More currently, automobile manufacturers like Volvo are offering Autonomous Emergency Braking (AEB), a safety feature that not only senses objects ahead, but automatically applies brakes to prevent an impending collision when the driver fails to respond timely. With an eye on the future, technology giant, Google, established a Self-Driving Car development program and successfully lobbied the State of Nevada to permit the operation of autonomous cars with a view towards creating and selling the software that will operate automated vehicles to come.
Among the many social, economic and political implications of their impending arrival is how to insure for accidents that cause injury, death or property damage when humans will be either minimally, or not at all, involved in the operation of an automated motor vehicle.
Since the beginning of automobile insurance, whether a particular insurance policy has to pay compensation for an injury or property loss depends directly on the acts or omissions of the drivers involved in the collision (aside from product defect claims). The requirement for each motor vehicle owner to purchase insurance spreads the cost of any individual policy over a group of millions of drivers. Consequently, the overall cost of an insurance requirement for motor vehicles is largely affordable for all and by society in general. If the motor vehicle accidents of the future are going to occur solely because of a software glitch, the parties responsible for the malfunction (e.g.) the software developer or the automobile manufacturer, are going to compose an infinitely smaller group of responsible parties for a potentially exponentially larger group of vehicle owners. Will this much smaller group be able to afford the kind of insurance coverage necessary to cover the millions of vehicle occupants of the future? Not likely. No doubt, there would be a tremendous push-back from these parties to avoid assuming full financial responsibility, arguing that such costs would thwart innovation and growth.
Of course, consumer and business interests will always insist that there be some form of insurance coverage in the future to compensate victims and families for injuries, death and property loss. No doubt, the structure of automobile insurance in the autonomous era will likely change from the one we know now. Traditional auto insurance carriers will be less willing (or not at all) to ensure a driver who has no actual control over the vehicle being operated. In the near future, when drivers may act more like air-line pilots and perform more supervision of the controls rather than actual hands-on manipulation of the vehicle, insurance carriers may seek a proportional role equal only to the fault, if any, attributable to their insured. If only a relative few companies generate the software that operates the majority of the vehicles of the future, one can be certain that pressure will be exerted to impose caps on recovery for pain and suffering as an allegedly necessary trade-off for encouraging technological innovation and protecting an infant industry.
How to tailor insurance in this ‘Brave New World’ of increasingly autonomous automobiles is the subject of an insightful and worthwhile 2014 report by Lloyd’s of London, entitled Autonomous Vehicles – Handing Over Control: Opportunities and Risks for Insurance.
The Lloyd’s report points to the Warsaw Convention of 1929 and the Montreal Convention of 2003 as potential precedence for an insurance approach that involves caps on damages. These treaties, which apply to the international airline industry, impose the limits on personal injury awards that apply uniformly no matter where an airline accident occurs. Concerns over interference with development and growth of the airline industry, as well as a desire to have global uniformity in the processing of liability claims, drove the adoption of both treaties. The same arguments will no doubt resonate with the autonomous automobile industry of the future.
Working through these issues will take a good deal of thought. Consumers and consumer advocates will have to remain vigilant, even as they enjoy the fruits of improved safety and technological advance, to watch for future insurance changes that impose arbitrary limits on otherwise just recoveries in the name of protecting fledgling industries. The future of semi-autonomous vehicles is already here. The fully autonomous vehicle is perhaps a few decades away, but only just a few.