Preparing to Insure Autonomous Vehicles

Autonomous vehicle technology is moving fast and is considered by many as an impending disruptor to auto, personal and products liability. But how imminent is the change and what will it look like? This session at the 2018 Advisen Casualty Insights Conference explored autonomous vehicle technology and the insurance market’s response.

Panelists included:

• Elizabeth K. Johnson, Head of Excess Casualty, AIG (Moderator)
• Alan Gier, Director, Global Risk Management & Insurance, General Motors
• Liz Kramer, Technical Director – Auto, Zurich
• Michael R. Nelson, Partner, New York, Eversheds Sutherland

Autonomous vehicles are projected to have a positive impact on the industry due to the increased safety projections. It is important to look at how coverage is going to shift and how we are going to price and underwrite the business. The decrease in loss is projected to have the largest impact on personal auto because the cost will shift away from human error.

There are different levels of automation varying from partial (where the driver assists) to full (where the car drives itself). This full automation technology might not be available until 2040. This means that the industry is not going to receive the full benefit of autonomous cars instantly. This technology will trickle into the marketplace, changing the risks related to it year by year. The industry will have to be nimble in its response.

Regardless, accident frequency is expected to fall dramatically from the technology improvements and car stock conversation – 45% by the year 2018 up to 90% by the year 2050.

Although motor vehicle accidents are expected to decrease, other aspects will still impact how we insure autonomous vehicles. Weather and cyber are two very important factors to consider. As we have more-expensive vehicles on the road, we still have these exposures that will significantly impact coverage and pricing.

There are very few laws established yet on decision-making technology like how the car swerves to avoid certain things. The formation of these laws will impact liability. The industry is hoping that the courts get a more-streamlined approach to establishing these laws so it can plan accordingly. It is expected that the federal government will determine what types of cars are on the road and the states will determine fault.