What the deadly Tesla self-driving car crash means for insurers

What the deadly Tesla self-driving car crash means for insurers

What the deadly Tesla self-driving car crash means for insurers The death of a man who perished while operating a self-driving car teaches would-be insurers of the new technology that they still have plenty to learn about the risks attendant with autonomous vehicles, industry figures say.

Joshua Brown of Canton, Ohio died in May when his Tesla Model S electric car was in self-driving mode, it was revealed last week. The National Highway Traffic Administration said the crash was caused when a tractor trailer made a left turn in front of the Tesla, which failed to apply the brakes. The roof of the car was sheared off before continuing for some distance down the road.

Investigations are ongoing and though insurance firms are paying close attention, many say it’s too soon to draw any major conclusions about autonomous vehicles.

“This incident will certainly be incorporated into our ongoing fact gathering efforts and recommendations,” the American Association of Managing General Agents (AAMGA) said in a statement. “[But] it would be premature to criticize Tesla Motors, the software or other technology provider whose products are part of the beta phase of the Autopilot program, before all of the contributing facts are known and understood.”

Others say emerging details from the crash suggest human risk will continue to be the primary concern for insurers as autonomous technology continues to evolve.

According to recent reports, both Brown and the driver of the tractor trailer failed to do due diligence while on the road. A DVD player was found in the Tesla, and several witnesses say a movie was still playing at the scene of the crash. The truck driver also had a long history of safety citations, with seven reported during four traffic stops over a two-year period.

That sends a critical message to insurers, says Paul Kovacs, executive director of the Institute for Catastrophic Loss Reduction.

“The insurer must understand what it is that the driver knows and doesn’t know,” he said. “How far along is their learning and awareness? That’s a critical part of providing insurance, and it’s not straight-forward.”

Kovacs also stressed that the incident won’t derail the progress of bringing self-driving vehicles to market, which Deloitte expects will take place over the next 25 years.

While insurers grapple with how to tackle the underwriting, Deloitte analyst John Matley says insurance agencies must rethink how they train new producers and how they approach cross-selling opportunities.

“If auto liability is more of a commercial product going forward, it will potentially impact agents and the distribution force in general,” Matley told Insurance Business America. “The reality is that as distribution evolves, potentially homeowners becomes a lead line instead of auto – especially if we’re looking to reduce the frequency and severity of losses in auto.”

Related stories:
Here’s what the driverless car means for your insurance agency
Morning Briefing: Tesla crash could delay driverless car roll-out
  • Underwriter 7/6/2016 1:09:13 PM
    This is the reason that the U.S. Department of Transportation (DoT) requires that the autonomous vehicle still have a steering wheel along with the gas and brake pedals. Although the vehicle is programmed to be "self-driving", drivers still need to pay attention and be able to react when the a situation arises where the program doesn't work as expected.
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