At DWF, we are considering the impact this technology will have on Britain. At a time when the ownership model for cars is changing in addition to the possible reduction in responsibility on the part of the car’s user, what impact will autonomous vehicles have on the insurance industry?
The opportunities and risks that automation presents in logistics, mean that retail is part of our focus as well as the technology itself and the infrastructure required to deliver connected vehicles.
The increasing prominence of connectivity features in new vehicles has the potential to transform the car-making industry. As telecoms companies, networking hardware firms, and peer-to-peer communications providers get in on the act alongside traditional automotive manufacturers, it will only become more difficult to establish liabilities, apportion blame, and secure restitution in the event of an accident.
As vehicles become more technologically sophisticated, the manufacturers’ old ‘ship and forget’ sales model will have to give way to ‘ship and update’, as seen in the consumer technology industry. We may even see a scenario unfold where manufacturers or vendors assert, as a condition of sale, the right to disable a driver’s vehicle in the interest of safety if a critical software update has not been installed.
Many drivers are already sitting behind the wheel of vehicles with sophisticated on-board telematics systems that monitor their behaviour on the road and transmit data to insurers and other third parties. Most will have chosen to do so in the hope of reducing their insurance premiums. But while the introduction of connected and autonomous vehicles onto UK roads is unlikely to reduce or remove the need for insurance entirely, the exact nature of the insurance cover that will be required will depend on how the law evolves.
Even if the legislation continues to require a human driver to remain at the wheel – which is likely at least during the near future while many different types of vehicles equipped with differing levels of technology occupy the same road space – it is questionable whether ultimately he or she can still be deemed fully responsible for the control of their vehicle. At some point this is likely to be challenged and a collision blamed on vehicle error.
We are used to considering the risk attached to the driver taking out a personal motor policy but the emphasis is likely to shift to the characteristics of the car. A further consideration is the growing trend towards vehicle subscription and hire schemes, rather than individual car ownership. Policies will increasingly be attached to the car rather than the driver.
But where would the liability shift to? First in line will be the manufacturer, with a shift towards product liability likely to see insurance bundled as part of the sale of the car. But what if the car has been serviced or repaired by a third-party supplier? Could the issue have stemmed from software glitches, hardware failure, or the myriad network connections that ensure vehicle safety? Or could highways authorities or other bodies responsible for urban planning one day find themselves liable for not having commissioned the relevant adaptations to transport infrastructure to accommodate autonomous vehicles?
At DWF we are considering all these issues with our clients and are keen to extend the conversation. The UK Government has set out its stall as a leader in providing the right regulatory framework to support testing of autonomous vehicles and some funding. There are plans for legislation to be reviewed within the next two years with guidance on the thorny issue of liability, as outlined above.
We are looking ahead to foresee where changes to the legal framework will be made and the impact these will have on our clients’ businesses – what we can say for certain is that autonomous vehicles are here, that change is happening and the business that reacts and plans now, is well equipped to thrive.