Tokio Marine & Nichido Fire Insurance will be the first carrier in Japan to insure accidents involving self-driving cars, starting April 2017. The insurer’s move aims to reduce waiting times for compensation, as well as marking a potential market shift.
Self-driving cars are classified in four levels. Level 1 includes vehicles with systems that control acceleration, deceleration, or steering, while level 2 covers vehicles which automate two or more of such operations. The third level, which requires driver input only during emergencies, has yet to hit the market, but Tokio Marine will insure vehicles up to level 3.
For now, the insurer will not cover level 4 vehicles, which are fully automated, with no need for human involvement. These vehicles are yet to be developed, and there are still questions regarding legal liabilities for such vehicles.
Tokio Marine will cover claims arising from defects in the autonomous driving system, as well as when the cause of accident is unclear. In case of an accident, the company will pay the driver to compensate the accident victim, then file simultaneous claims against all the other relevant parties. This saves time and effort for the individuals involved and it also makes it easier for businesses to respond.
With around 15 million motor insurance policies, Tokio Marine has a 26% share of the Japanese market. Motor insurance is the main source of revenue for many Japanese insurers, making up almost half of domestic net premium income. The arrival of self-driving cars is seen as potentially causing huge disruption to the industry, and insurers are expected to take steps to adapt to the change.
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