Self-driving trucks crashing insurance?

The road to self-driving trucks may be paved with insurance disruption, but there’s a long way ahead.

That’s according to insurance broking experts, who remain skeptical that autonomous trucking will reshape transportation insurance in at least the coming decade.

“It’s a way off still, I don’t know that I’ll ever see it in my career,” said Risk Strategies VP Brian Jungeberg (pictured top, left).

The transportation insurance specialist pointed to self-driving trucks “plugging along” in the testing phase, with price and availability also holding back widespread adoption back.

Nevertheless, self-driving trucks are “not something that we should give up on,” Jungeberg said.

A decade “if not more” is a reasonable timeframe in which to expect self-driving trucks operating on a commercial scale, Gallagher transportation practice managing director Chris Demetroulis (pictured top, right) told IBA. The insurance broking transportation expert likened a likely rollout for self-driving technology to the initially slow permeation of high-definition television.

“Even though you could purchase a high-definition TV, it was expensive and then nobody was broadcasting in high definition so it took years for it to get there,” Demetroulis said. “We’re in the same kind of scenario right now [with driverless trucks], albeit technology is curving upward with more rapid growth.”

Trucks are not fully self-driving – yet

Self-driving and advanced driver assistance systems (ADAS) vehicles run on an automation scale of one to five. Level one requires the most input from a driver and five requires no driver whatsoever.

Trucks currently on the road run at no higher than a level two, according to Demetroulis. This means that a driver is required in the cab, with the vehicles able to control speed and steering in some conditions through the use of sensors and cameras. Pilot projects have been underway across some states on select lanes, including in Texas and Florida.

The five levels of autonomy – what vehicle automation levels look like

^{Source: U.S. EPA}

Efforts underway in the push towards commercial self-driving trucks – but there have been roadblocks

Some companies have pledged to push out ‘fully autonomous’ trucks by 2025, and the technology does exist in small taxi and delivery vehicle fleets in some major cities. Nevertheless, self-driving truck arsenals are set to remain small meaning the required underwriting footprint will be limited.

Aurora Innovation will look to put 100 on the road by 2025, while Kodiak Robotics has plotted a launch this year, The Verge has reported.

Other companies once seen as big potential players in the space, including Alphabet’s Waymo and TuSimple, have pulled back.

States have taken a fragmented approach to self-driving vehicles. Just six have legislated specifically on self-driving trucks. Twenty-nine (29) have come out with broader autonomous vehicle rules.

How states are looking at autonomous vehicles

As per the National Conference of State Legislatures, not all states have engaged in autonomous vehicle legislation:

• In 2018, 18 bills related to autonomous vehicles (AV) were passed by 15 states.
• Throughout 2017, legislation on AV was introduced by 33 states, following 20 states in 2016.
• The number of states introducing AV legislation has been on the rise: 16 in 2015, 12 in 2014, nine plus D.C. in 2013, and six in 2012.
• Since 2012, legislation pertaining to autonomous vehicles has been considered by at least 41 states and the District of Columbia (D.C.).
• Legislation concerning autonomous vehicles has been enacted by 29 states—Alabama, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, New York, Nevada, North Carolina, North Dakota, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Vermont, Washington, and Wisconsin—and D.C.
• Executive orders on autonomous vehicles have been issued by the governors of Arizona, Delaware, Hawaii, Idaho, Illinois, Maine, Massachusetts, Minnesota, Ohio, Washington, and Wisconsin.

A potentially staggering workers’ comp and auto insurance impact

It may take some time before driverless trucks become commonplace, but the insurance impact could be staggering.

Deloitte has cautioned that $3 billion of workers’ compensation premium could be wiped out.

Self-driving technology could eliminate a requirement for around 360,000 long-haul truck drivers, researchers have predicted.

Developments come as trucking is experiencing a painful talent shortage, but truckers remain wary of the job loss impact and there is some stiff opposition. California Governor Gavin Newsom’s fall 2023 veto of a self-driving truck ban drew outcry from union Teamsters.

The widespread introduction of self-driving trucks could further drive a premium shift across a number of lines, with changes being seen in commercial auto, cyber, and product and professional liability.

The good news for underwriters is that a gradual rollout will likely see them able to crunch the data as self-driving truck proliferation grows on specific routes. This should give them time to build a better understanding of the risk.

“The underwriting community is going to be able to assimilate this because it’s going to be a very miniscule percentage of miles that will be driven by autonomous vehicles at the beginning,” said Demetroulis. “I don’t think all of a sudden you’re going to see a switch come on and half of the vehicles are going to be autonomous and you’re going to have half of [total] miles driven, so I think that it will naturally be able to have an uptake of that risk as it moves into the industry.”

Self-driving trucks – where will the liability lie?

Questions persist around where the liability might lie in the event of an accident, with manufacturers, owners, suppliers, repairers, and other stakeholders potentially in the frame.

Americans can expect to see these questions hammered out in the legal arena when the first higher automation level claims do come in.

It also remains to be seen how well self-driving trucks might handle dangerous weather conditions like hail and snow.

Hammered by inflation and nuclear verdicts, commercial auto insurers more broadly have struggled with the largely unprofitable line of business for more than a decade. With human choices a factor in more than 94% of auto accidents, as per the National Highway Traffic Safety Administration (NHTSA), a fundamental trucking and insurance change may not be entirely unwelcome.

The route to get there could be slow and winding.

Got a view on self-driving trucks and the potential insurance impact? Share your thoughts in the comments below.