Insurers will have to tackle a range of new problems when working out how to cover autonomous and semi-autonomous vehicles, specialists in the field told a conference in London.
Over-the-air updates to driverless car software will be "a fundamental change and challenge to the insurance industry," said Matthew Avery, director of insurance research at Thatcham Research, a crash test center fund by the U.K. insurance industry.
"Software version 1 may have one functionality and software version 8 a very different functionality," Avery said April 30 at an automated vehicles event hosted by the Association of British Insurers.
"The car you insure on the Friday is not necessarily the car that the customer is driving on the Monday, and you will need to know that."
The potential for a car's capabilities to change rapidly is only one challenge insurers face when trying to assess the risk profile of autonomous vehicles.
David Williams, managing director of underwriting and technical services at Axa's U.K. subsidiary, Axa Insurance PLC, said in a presentation that automated emergency braking systems have reduced overall accidents by 15% and injuries by 18%, but that Thatcham's research had shown that different manufacturers' braking systems performed better at different speeds.
"Our pricing model therefore needs to understand the individual components and also ... where the vehicle is going to be used so we can determine what speed it was traveling at," he said. "It is quite a dramatic change."
Vehicle autonomy is measured using the Society of Automotive Engineers' Levels of Driving Automation standard, where Level 0 indicates no automation and Level 5 denotes full automation in all circumstances. Human drivers are out of the loop completely from Level 4 upward. Vehicles with automated emergency braking systems and lane centering are already on today's roads, and cars have reached as far as Level 2.
A further issue for insurers is that autonomous cars return control to the human driver in certain conditions — for example, a potential collision that a car feels it cannot handle.
"We see this fundamentally as unsafe," Avery said. "We cannot rely on the driver to be the safety backup."
Avery suggested that such systems should have cameras to monitor whether the driver is paying attention at the time the vehicle asks him or her to take control and that there should be a clear "offer and confirm" process on handover so it is "absolutely transparent" who is doing the driving.
Man vs. machine
Who, or what, is driving at the time of the accident will have a big bearing on an insurance claim.
If a human driver causes the accident, the liability part of a traditional driver-focused motor policy would apply. But if a vehicle is in control, it is widely expected that product liability cover for the vehicle manufacturer and its supply chain would be claimed on.
Peter Allchorne, partner at law firm DAC Beachcroft, said on a panel discussion that in the longer term, he is expecting less litigation and safer roads as a result of greater vehicle automation.
But he added that in situations where vehicles hand back control to human drivers when they reach their limits, and when the human driver may not be fully engaged, "you can not only be looking at a lot of civil litigation under traditional motor liability principles but also criminal culpability of individuals."
There is also scope for confusion about a vehicle's capabilities.
Consumers, fueled by vehicle manufacturers' marketing, may think their new car is capable of more than it is.
"There is a real danger that consumers become disengaged when they shouldn't do, resulting in incidents and litigation," Allchorne said.
Although tackling increasing vehicle autonomy will be tough for insurers, Axa's Williams believes companies should rise to the challenge, or risk going the same way as a well-known failed video rental firm.
"We could take the traditional insurance approach, 'let's not risk anything new,' and we could be the next Blockbuster — absolutely irrelevant. Or, alternatively, we can seize the opportunity and move forward," he said.