Car insurance may have operated essentially the same way for many years, but it faces a new complication in the form of self-driving cars. In an accident, questions abound whether it was the fault of the autonomous system or the driver, how it can be determined whether the car was manually driven or automated at that moment and if the system had been tampered with or hacked.
As the industry grapples with how to cover such vehicles and how to educate consumers on the new world, different versions of a potential legal framework and normal practice are emerging across nations. Governments and the whole industry, including automotive executives, trade bodies and the entire supply chain, must co-operate to develop a proper, singular legal framework that reflects the globalised sector. That framework must also be able to adapt to the constant evolution of smart technology.
“Developing global standards is absolutely critical. There must be clear terms around safety, liability and data privacy,” says Niall Edwards, partner and automotive litigation expert at Kennedys . “This is achievable but it needs everybody, from manufacturers, the supply chain and insurers to governments around the world, to discuss the issue and create common terms and standards.”
A variety of discussions are already taking place around the world, and many in the vehicle industry want to see a clear coverage and liability system, global to national, for what will happen if an autonomous vehicle is involved in an accident. But there are already some significant differences between the approach adopted on liability and insurance coverage in different countries.
In the European Union, particularly in Germany, there is a move towards a more strict liability system, founded on a putative ethical base, with proposals that the driver has responsibility for any actions of the autonomous car. The UK plans to have driverless cars commercially available in 2021, creating a £28-billion industry, but the review of the legal framework is still at an early stage and there is the risk that Brexit leads to a separate approach.
In the United States, some of the most advanced vehicle testing is taking place with autonomous vehicles on the roads in California and Arizona, and many states’ legislation has jumped to the finish line, covering vehicles without any human input. Earlier this year, the US earmarked $100 million for a highly automated vehicle research and development programme. Meanwhile, in Singapore and Dubai respectively, automated taxis and drones are being tested, and related regulatory frameworks are being developed.
The complexity created by these potentially conflicting laws creates a dangerous situation in which there could be serious confusion, even gaps, in how liability, safety and privacy are handled in different nations. The automotive industry, insurers and government regulators must urgently tackle the problem.
We risk the impending arrival of autonomous vehicles on some countries’ roads without common standards
“We do still see some naivety in attitudes. In some markets the thinking remains to legislate when self-driving cars are a more obvious reality for the roads,” says Mr Edwards. “But communication between interested parties needs to be promoted by government now. Otherwise we risk the impending arrival of autonomous vehicles on some countries’ roads without common standards.”
The automotive industry can learn from work in the aviation and marine sectors. He explains: “In aviation, there has been steady creation of harmonised drone regulations by the Joint Authorities for Rule-making on Unmanned Systems, a body of experts. Within this process there is an emerging consensus on the categorisation of drone operations based on risk levels, licensing, registration and designation of airspace drones can be flown into.”
Meanwhile, in the marine industry, existing conventions and regulations presume that a vessel is crewed and discussions are examining potential legal liability frameworks that include autonomous ships.
Another aspect complicating liability is access to proprietary in-car telematics data that reveals how and where vehicles are driven. A standard format of data is needed so that following any accident, insurers and local authorities can check what happened. “The key is translating manufacturers’ own proprietary data formats into a standard that can be accessed by others to assess how an accident happened and who is liable,” says Mr Edwards.
Consumer concerns remain around how such data will be used, and manufacturers and insurers must be upfront about this. By being open, there will be a better appreciation of autonomous vehicles by consumers and therefore more take-up. In addition, manufacturers will reduce tension with key-partner insurers that provide white-label insurance services.
There must also be a focus on communication with citizens, with Kennedys’ research showing more than half of drivers are concerned about driverless cars and 49 per cent fear a rise in their insurance premiums.
“Any campaign could be like those we have seen in health, for example, around exercise and tackling obesity. It needs to be significant because autonomous vehicles are going to change the world we live in,” says Deborah Newberry, the law firm’s head of corporate and public affairs. “The government’s ambition is clear and this represents a chance for the UK to be a truly worldwide leader in the field of autonomous technology.”
International, industrywide standards are needed around liability, safety and data privacy for those driving autonomous vehicles. These are achievable with full international co-operation across manufacturers, insurers and governments, and clear communication with citizens. Kennedys, an expert in this area, works with insurers and car manufacturers to advise on liability and data privacy, and is lobbying governments to create an effective international framework that protects drivers and all parts of the industry