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Liability in the future of self-driving cars

As S'pore continues on its Smart Nation journey, insurers have to tackle the uncertainties of autonomous vehicles

The global market for driverless cars is expected to reach US$42 billion (S$58 billion) by 2025, with more than 30 companies around the world already known to have invested heavily in the necessary research and development.

Singapore, as part of its Smart Nation journey, is now joining the movement and making headway in this space.

Driverless vehicle trials are already taking place at one-north, Nanyang Technological University, Gardens by the Bay and Chinese Garden.

SMRT has entered into a partnership with Dutch company 2getthere, while Tesla, maker of the world's only fully self-driving cars, is accepting local pre-orders of their upcoming model slated for production later this year.

But as the future of driverless vehicles begins to become a reality here, important questions are also raised, particularly around safety.

How will liability be determined in case of accidents? And, subsequently, how will these vehicles be insured?

Providing clarity around this first requires understanding of how non-autonomous vehicles are currently insured.

Today, there are six parties who bear the risks of vehicle operation and safety: vehicle manufacturers, component manufacturers, vehicle importers, the driver, the vehicle owner, and the government.

With every insurance claim made, the most prominent area of conflict exists between the vehicle manufacturer, who is responsible for the operational capacity of the vehicle, and the driver, who is fundamentally responsible for safe and compliant operation that complies with the road rules in a manner that avoids causing injury or damage to others.

In other words, new risks that we are still working to understand will emerge, and insurance products will continue to bridge the uncertainty around them.

INPUT

In a human-controlled vehicle, the driver's input has a direct outcome in the way the vehicle manoeuvres, and hence any incident is often a direct result of the driver's actions.

But if the vehicle is autonomous, the onus for safe operation would appear to fall on the vehicle manufacturer. This is where problems arise.

Yes, any defect in a vehicle that causes injury can place liability on the manufacturer.

However, if it can be proven that the driver was aware of the defect but continued to operate the vehicle, liability may fall on the driver.

Depending on the individual specifications of current and future autonomous vehicles, there may also be cases where vehicles allow users to decide just how much autonomy is granted to the vehicle's driving systems.

In these instances, responsibility will shift accordingly.
We will also need to cater for risks associated with technology's failure to deliver all the time.

Indeed, it is possible that damage to an autonomous vehicle will not always be the fault of the vehicle, the manufacturer, the driver (if there is one), the supporting infrastructure or other parties on the road.

NEW RISKS

In other words, new risks that we are still working to understand will emerge, and insurance products will continue to bridge the uncertainty around them.

For example, as responsibilities for vehicle operation shift to a vehicle's computer systems, the insurance industry will need to be wary of the possibility that these systems are vulnerable to external interference such as hacks and denials of service.

Insurers will hence need to adapt insurance products to cater to this evolving new risk.

The case of a nuTonomy taxi running into a lorry in one-north and also a recent accident in the US involving an autonomous Uber vehicle that was left on its side are both reminders that driverless technology is far from foolproof yet.

The transitional period we are in will be one of great learning and of unknown risk.

Society will look to insurers to lead the way, and for insurance products to have a key role in providing certainty to policyholders, industry and the community during and likely beyond this period.

While the advent of autonomous cars is groundbreaking, the concept of a significant paradigm shift in motor vehicle transportation is not a new dilemma for insurers and nor does it make insurance irrelevant.

After all, modern insurance has been at the forefront of industrial change since the 1600s, including the first motor vehicle's arrival in the 1890s.

The cars of the future may go without drivers, but motor vehicle insurance will always be necessary to provide stability and certainty to consumers in Singapore and elsewhere for as long as individuals or organisations continue to own vehicles.

Karl Hamann is CEO of QBE Insurance Singapore, and Grant Pearce, head of product - personal lines at QBE Insurance Australia. This article appeared in The Business Times yesterday.

CarinsuranceBusiness