The year is 2026 and mankind is about to hand over all operational authority to Skynet, an all-seeing, all-knowing artificial neural network. As the machines prepare to become our overlords, there enters on the stage a figure, dressed conservatively and carrying a briefcase, asking to see whoever’s in charge. The dawn of the dreaded Age of the Machines might have to be delayed … the lawyers have arrived.
Unless you have been living under a rock, like many humans are forced to in the imagined future of the Terminator movie franchise, you will be aware that big players with big money are trying to develop vehicles that will drive us around without our assistance. In Ontario, these vehicles are being tested on public roads as this article is being written.
In all the excitement (hype?) over self-driving cars, the media have overlooked the lawyers. More specifically, the legal changes necessary to our insurance regime built up over many decades since we unharnessed horses in favour of the internal combustion engine.
Human error is what drove the development of insurance liability law. These new proposed innovations will require a 180-degree pivot to address failures of technology instead.
The Insurance Bureau of Canada (IBC), who represent Canada’s property and casualty insurers, prepared a report in 2018 in which they argue that fully autonomous vehicles present new risks to the Canadian auto insurance sector and its stakeholders.
To address these risks, IBC calls for fundamental changes to provincial insurance laws and federal vehicle safety standards.
IBC identifies four different impacts on the auto insurance industry that will accompany this evolution:
1. There will be fewer collisions, but the technology in automated vehicles will make repair and replacement more expensive: In a U.S. study, KPMG predicts that over the next 10 years, automated technologies will reduce the frequency of collisions by 35% to 40%. However, because the technology for automated vehicles is expensive, KPMG predicts that repair costs will increase by 25% to 30%.
2. Vehicle use will have new risks: The European Parliamentary Research Service identified risks that will emerge with the rollout of automated vehicles. These risks include software and network failure, programming choices, hacking and cybercrime, and failure to install or update software.
3. Vehicles will record significant amounts of data: Vehicles will be equipped with complex sensors that can monitor and record vehicle activity. According to Deloitte, this data will be more reliable than human-reported or human-collected information for assessing risk, pricing auto insurance, managing claims and detecting fraud.
4. Responsibility for collisions will shift from the driver to the automated technology: The U.S. National Highway Traffic Safety Administration states that human error is the primary cause of more than 90% of collisions. As automated vehicles shift liability toward vehicle manufacturers and technology providers, there will be more product liability litigation.
IBC’s suggests addressing these impacts through focusing on two key areas:
1. A single insurance policy covering both driver negligence and the automated technology: The automated vehicle’s insurer would compensate injured people if the automated vehicle caused a collision, regardless of whether the human operator or automated technology was in control.
2. A data-sharing arrangement with vehicle manufacturers, vehicle owners and/or insurers: The data-sharing arrangement would help determine the cause of a collision, whether the vehicle was in manual or automated mode at the time of the collision and the vehicle operator’s interaction with the automated technology.
We have become used to the disruptive effects of technology in our daily lives. From Amazon and Ebay changing how we shop to Uber changing how we hail a ride, it seems we just hear about the next new thing and before we know it, it has become the “new normal”.
It may be that autonomous vehicles will be that kind of disruption, or it may be that it will not, but I suspect, in the end, the answer to that may have a lot to do with the lawyers.
You can read the full study in a pdf found here http://assets.ibc.ca/Documents/The-Future/Automated-Vehicle-Report.pdf
The problem’s plain to see
Too much technology
Machines to save our lives
– Styx, Mr. Roboto, 1983