Self Drivings Cars and the Future of Car Insurance in the UK

white-tesla-on-grass-croppedAcross the world, technology continues to advance at an alarming rate. Things that a few years seemed like a distant, futuristic fantasy are now just part of our day-to-day lives. Although they have yet to perfect the jetpack, there is one piece of travel tech which is on the cusp of being made available commercially: autonomous vehicles.

Experts predict that by the 2020’s fully autonomous cars could be a common site on UK roads, and that by this point the vehicles will be ‘connected’. This means they can share information and communicate with other autonomous vehicles, with the aim being to reduce accidents and ease traffic and congestion.

Advancing Driving Technology

Conducting this type of research requires some serious investment, and for the past 8 years Google have been doing just that. They are testing this driverless technology on real roads, and although not perfect the results are certainly encouraging; over a 6month period, the cars clocked up 424,000 miles with only 13 occasions where the intervention of the human driver was necessary to prevent a crash. And with over 90% of accidents on the road a result of human error, advances in autonomous technology will only make the roads a safer place.

Without this research, modern features such as Autonomous Emergency Braking (AEB), Active Cruise control, lane departure warning and automated parking would not exist. So it is clearly making driving safer and easier for many motorists.

Liability Shift

As autonomous vehicles become a reality, insurers have the difficult task of working out how an autonomous insurance policy would work, particularly considering the unique set of challenges it poses. Essentially, the risk is being transferred from a human to a computer, meaning the computer would be liable in the event of an accident. Meaning the creator of the computer (read – the vehicle manufacturer) takes the blame. Which can pose a large strategic risk for manufacturers looking to enter the autonomous car market, as not only are they having to product the product, but absorb all the risk to the consumer as well.

And the rate at which technological advances are being accomplished in the field are faster than the rate at which actuarial insurance tables are made, placing insurers at a complicated cross road.

Law and Legislation

driverless-car-insideThe UK government are committed to leading the way when it comes to driverless technology, and last July invited people to participate in a consultation on laws surrounding it. Ex-chancellor George Osbourne wants testing with driverless car to start as soon as possible, so they can be rolled out from small rural roads to cities in the shortest time possible. And Transport Secretary Chris Grayling has recently drafted legislation that will govern driverless cars in the UK.

This change in technology means that the Highway Code requires an overhaul and regulations regarding remote control parking and motorway assist features will be addressed also. They must also take into account the different levels of automation and how to class each vehicle, as some vehicles are more autonomous than others.

More than just Car Insurance

In January 2016, the ABI (Association of British Insurers) led a group of 13 large insurance companies to form the Automated Driving Insurance Group (ADIG) in order to tackle these questions head on and set a UK precedent for autonomous vehicle insurance. With the subject of liability up for debate, this could even lead to an entire restructuring of the insurance industry. Research has even suggested that insurance premiums could fall by up to 80% over the next 20 years.

In addition to liability, risks such as software hacking, operating system, satellite failure and navigation updates have to be taken into account, which could be more prevalent than mechanical failures in the near future.

When a motorist hands complete control over to the vehicle they can rest assured that their insurers will pay out in the normal manner to any victims should an accident occur. The insurer could then claim the money back from the manufacturer if it is deemed that the vehicle was at fault.
John Dalton, head of the ADIG, said:

“Insurers strongly support the Government’s ambition of making the UK a world leader in this technology and believe the insurance industry has a key role in helping give consumers confidence in using these vehicles when they become more widely available.”