Car insurers unprepared for driverless cars

Car insurers unprepared for driverless cars

A survey conducted by global insurer Munich Re has shown that 65% of risk managers believe their companies have done nothing to prepare for the emergence of autonomous vehicles (AVs).

A number of car makers are getting closer to having driverless cars on roads. BMW has announced that it will collaborate with Intel and Mobileye to help rapidly introduce vehicles with full self-driving capability by 2021.

The German car maker is plotting the move to introduce technology that, it claims, will “change lives and societies for the better”.

Google self driving LexusLand Rover has revealed its plans to create a fleet of more than 100 research vehicles by the end of the decade to test a range of ‘connected and autonomous vehicle’ (CAV) technologies

However, a big setback came recently when a Tesla Model S cruising on autopilot failed to pick up a crossing tractor-trailer against a bright sky, sending the driver to his death without any effort to hit the brakes.

The first known fatality from autonomous driving technology, it was regarded as a nightmare scenario for an industry promoting a way to improve road safety and reduce traffic fatalities that come mostly from human error.

Tesla says the autopilot system, introduced last year, is not a fully autonomous system and that drivers are cautioned that they need to be at the wheel and in control.

The system allows the vehicle to automatically change lanes and manage speed and brakes to avoid collision. The system may be over-ridden by the driver.

Mike Scrudato, senior vice president of mobility domain at Munich Re US, told Insurance Business that the insurance industry still has a ways to go before it is ready for the emergence of driverless technology.

“We believe liability will shift, exposures will be more complex and coverage issues will take time to emerge,” Scrudato says.

“Insurers need to understand the issues, be prepared to adjust, and develop innovative solutions for the risks AVs will present.”

Scrudato notes that the development and rollout of autonomous vehicles has great potential to increase road safety but insurers need to respond quickly to evolving risks.

“AVs provide an opportunity to significantly increase safety and reduce losses related to vehicle crashes. The challenge is for insurers to respond quickly with new products that address the unique risks AVs will present.”

One aspect of driverless technology that surveyed risk managers were quick to point out was security as 55% feel cyber security is the greatest insurance concern associated with autonomous vehicles.

“We feel there are increasing cyber risks as vehicles become more autonomous and more connected,” Scrudato adds.

“Cyber is not a forgotten aspect of this exposure, but one of the many aspects of the liability that will evolve over time.”

Allocation of liability when autonomous and non-autonomous vehicles shared the road was listed by 27% as the top concern, whilst 7% listed economic disruption and safety.

Scrudato stresses that the time to act is now as the reality of driverless cars draws closer.

“We feel it is a matter of when, not if, autonomous vehicles will be a reality,” Scrudato notes.

“There are partially autonomous vehicles on the road today, and car makers are taking every opportunity to invest in this technology.”

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