On 30th July 2017 the UK Government announced that driverless cars will be permitted on public roads from the beginning of 2018. This may come as a surprise to some, but there have been huge advances in driverless car technology by manufacturers and Silicon Valley tech companies over the last decade with names like Tesla, Google and even Dyson leading the race. These firms are all jostling for future market share in what will undoubtedly be a very lucrative market – but what do motorists and car insurers have to look forward to?
Well, driver safety has got to be the key reason for buying into Automated Driving Technology (ADT) for both insurers and motorists alike. The business insider says that with “full 360 degrees’ view around the car, it can be tracking multiple objects, with much greater things happening, with much greater accuracy than any human” . In theory, the smart technology should reduce the number of incidents on the road which in turn should reduce premiums for all motorists. However, it would be naïve to think that the arrival of ADT will be the dawn of accident free roads – that simply will not be the case!
Incidents on road will still occur for a number of reasons;
- A mixture of operated and driverless vehicles on the road
- Faulty technology
- Reduced accuracy of the technology in poor driving conditions
This means that we will still rely on insurance to protect drivers’ assets and liabilities…
Now, in an uncharacteristic fashion we have seen the insurance industry invest heavily into an emerging market with great enthusiasm, according to the Association for British Insurers (ABI) the ‘insurance industry is 100 per cent committed to supporting the development of automated vehicles, which have the potential to dramatically improve road safety and revolutionise our transport systems.’ In fact, AXA UK who are the largest domestic motor insurer is advising the government on their driverless car policies.
The current proposal by the ABI for driverless car insurance policies are as follow;
- They [motor owner] will need just one single insurance policy and can use the automated mode whenever road regulations permit, without having to alter their level of cover.
- If another driver, cyclist or pedestrian needs to make a claim, they can go direct to the insurer and won’t need to worry if there is a dispute over whether the vehicle technology was responsible for an accident.
- If a vehicle does fail to cope with the road situation, for whatever reason, drivers will not be unfairly held responsible for an accident they could not prevent – insurers will recover any costs involved in settling the claim from the responsible manufacturer.
- Anyone injured while using a car in automated mode will also be able to claim appropriate compensation for their own injuries. Even more importantly, the system is simple for claimants.
Motorists already benefit from aspects of driverless car technology such as parking assistance, cruise control and automatic braking, but fully automated cars are unlikely to hit the roads until 2020. We hope this will give insurers and legislators enough time to make sure that the correct policies are put in place to protect the motorists.
Written by Josh Robinson, Portfolio Associate