How prepared is the current auto insurance landscape to handle accidents involving self-driving cars? Ryan Stein from Insurance Bureau of Canada (IBC) provides insight and proposes a two-part framework for updating insurance laws.
Highlights
- IBC recommends a two-part framework to update auto insurance laws to deal with the adoption of self-driving cars: a single insurance policy that covers both conventional and automated cars, and a data-sharing policy to help identify the cause of accidents.
- Self-driving cars will create challenges for insurers as they introduce new risks with driving, such as cybercrime and hacking risk. However, they will also create opportunities for insurers to better meet consumer needs.
Insurers need a strategy to insure self-driving cars, with Ryan Stein
Welcome back to the Accenture Insurance Influencers podcast, where we interview some of the industry’s experts on trends shaping the future of the industry. Our first guest is Ryan Stein, the executive director of auto insurance policy and innovation at Insurance Bureau of Canada (IBC).
In this episode, Ryan explains the importance of proactively updating auto insurance laws before a mass adoption of automated vehicles, and discusses IBC’s proposal to bridge the gap between conventional and automated vehicles to enable innovation and protect consumers from prolonged claims processes.
The following transcript has been edited for length and clarity.
In our last episode, you talked about the need for insurers to proactively look at updating auto insurance laws before automated vehicles hit the roads en masse. Why is that important?
If you wait for there to be a mass of automated vehicles on the road, it’s way too late. It’s important to start looking at these issues as these vehicles start coming off the assembly line one at a time.
You don’t want people that are injured in a collision to go through a lengthy claims process, so you want the laws to make it as fair and quick as possible. Legislation to address this exact issue had already been passed in the United Kingdom, where a single insurance policy was created to cover liability claims or provide coverage if the automated vehicle caused the collision, regardless of whether it was the person operating it or the automated technology.
And what does that mean for someone who’s in an accident involving an automated vehicle?
People who are injured don’t have to get into the negotiation of whether it was the person or the technology, because the single insurance policy allows them to compensate and move on with their life while the insurance company and the vehicle manufacturer or technology provider figure out the cause.
Other approaches considered included maintaining the status quo, which was deemed inadequate, and full no-fault insurance, which wouldn’t be feasible until all vehicles are automated. IBC’s working group decided that the single insurance policy would work for both conventional and automated vehicles, ensuring fair and quick compensation without lengthy product liability litigation for injured parties.
And what does the second part of the framework entail?
The second part called for a data sharing arrangement with vehicle manufacturers, owners, and insurers, enabling collaboration to determine the cause of a collision and facilitating recovery proceedings between the insurer and the vehicle manufacturer or technology provider.
Are insurers equipped to implement this two-part framework now? Or are there capabilities that they should be looking at investing in?
I think insurance companies are used to managing claims in very complex situations and analyzing data. While there will be some procedural changes, insurers have the capabilities to adjust their practices accordingly.
I think that insurers might be looking at automated vehicles and autonomous vehicles as equal parts challenge and opportunity. I’m wondering if you could speak to both of those.
- There will be fewer collisions, but the technology in these vehicles will make repairing and replacing them more expensive.
- There will be new risks associated with driving, including software and network failure, hacking, and cybercrime, which will require insurers to develop new policies to address these risks.
- Vehicles will record lots of data, which will help determine the price of the risk or of the auto insurance policy and helping settle claims.
- Vehicle automation has a lot of potential to improve road safety, benefiting insurers, consumers, and society.
For more guidance on self-driving cars:
In the next episode, Ryan will explain why it’s so important for insurers to proactively engage governments and regulators on issues like self-driving cars. He’ll also share general principles for updating laws to accommodate new technologies and trends.
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