Travelers Companies has released a white paper which outlines a framework for autonomous vehicle insurance.
The white paper, “Insuring Autonomy: How auto insurance can adapt to changing risks,” was authored by the Travelers Institute – the public policy division of Travelers Companies. It was unveiled at the 2018 Automated Vehicles Symposium.
“With the increasing adoption of semi-autonomous vehicles and the potential for fully autonomous vehicles, several policy-related questions and challenges are beginning to emerge,” commented Travelers executive vice-president and president of personal insurance Michael Klein. “It’s important that the insurance industry play a central role in policymaking discussions to develop a uniform legal and regulatory framework for autonomous vehicles. Ensuring that a clear risk transfer mechanism is in place will help facilitate the development of autonomous vehicles and the improved safety we expect they will bring to our roads.”
Although the adoption of autonomous driving technology will lead to fewer accidents, the few collisions that occur will likely result in costlier repairs, the paper suggested. Travelers also noted that accidents involving autonomous vehicles will raise difficult questions relating to driver and manufacturer liability, victim compensation and data collection.
Travelers added that even with autonomous cars, the general risks that come with vehicle ownership – whether autonomous or otherwise – will remain. Such risks include the weather and theft.
Notably, Travelers said in its paper that it believes the auto insurance industry is well-positioned to address the compensation issues (such as bodily injury, property damage, cyber incidents, etc.) arising from the autonomous vehicle market versus alternative models such as product liability.
“Leveraging the current auto insurance structure as the primary risk transfer mechanism in a new AV world allows for speed, fairness and efficiency from the consumer’s perspective,” Travelers said in its paper.
The company added that auto insurance has a lot of things going for it that other insurance models cannot compete with:
- Auto insurance is something most vehicle owners are familiar and comfortable with (compared to other insurance models); this allows them to better take advantage of auto insurance’s benefits for their autonomous vehicles.
- The existing auto insurance structure can adapt more effectively than alternative structures to the ever-changing regulatory and legal environment by either creating and/or enhancing insurance products.
- Alternative risk transfer systems such as product liability are not structured to be primary, comprehensive solutions, unlike auto insurance.
The paper also came up with the following recommendations for the auto insurance industry to take note of:
- Develop a model state law relating to autonomous vehicle insurance that builds on the current state-based regulatory and oversight structure.
- Require vehicle owners — including personal, ride-sharing and company-owned vehicles — to purchase and maintain adequate insurance.
- Provide for sufficient coverage to account for the more expensive technology used in autonomous vehicles.
- Establish strong cybersecurity requirements for autonomous vehicles, including appropriate data-sharing protocols.
- Utilize insurers’ extensive consumer communication programs to help educate customers and the public on autonomous vehicle safety.
- Ensure representation of the insurance industry in policymaking and stakeholder forums.