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Insuring Driverless Cars

With driverless cars being tested on the roads of London it has made people realize the future of driving is all about to change. The British government is currently funding three driverless car projects with UK Autodrive in Milton Keynes, Venturer in Bristol and AXA.

The idea of driverless cars has raised a lot of questions; people want to know if they are safe and who is at fault if a driverless car crashes, but also who will be responsible for insuring these cars? Will it be the manufacturers who design the models running the car or will it be the owner of the car?

The CEO of AXA spoke at the ABI Motor Conference in 2014 stating:

"Already we can assume that there will be different insurance needs to cover personal, product and perhaps even infrastructure liability. As cars become connected and autonomous, cyber risk will take on a whole new dimension! We play a significant role in society by allowing people to manage the risk in their lives and mitigate the damage if something goes wrong. As innovation impacts their lives and the risks they face, so must we innovate too."

Adrian Flux claims to be the first company to provide an insurance policy for driverless cars. The policy is currently designed for cars that have some driverless features such as self-parking or auto pilot which became famous in the Tesla models. Completely self-driving cars are not expected to reach the market until 2020 with Volkswagen planning to release numerous models. That is only 4 years away however so a lot is going to happen fast.

With more than half of the vehicles sold last year featuring self-parking technology or ABS (anti-lock braking) which basically takes over control from the driver, it is expected that the next five years will see an increase in driverless technology. The question still remains however, who is going to be responsible for insuring these vehicles?

Last month the modern transport bill publicized it is looking to expand compulsory cover to accidents where the car, not the driver are at fault. The Association of British industry backed the move and is working alongside the government on insurance policies and liability issues to establish when the drivers or manufactures will be held responsible.

According to a consulting firm in America, Fehr & Peers, by 2040 half of the US traffic will be autonomous as the technology becomes more available and affordable for the mass market. For the insurance industry this would have a massive impact. With over 90% of all accidents occurring due to human error if we remove the humans from the control there could be a dramatic decrease in the number of accidents therefore the number of claims. It is predicted that in the UK market there could be a fall of 63% by 2060 causing profits in the motor industry to decrease by 81%.

However as technology advances so does the insurance policies, with the risk of hackers and still the issue of vandalism there will always be a need for some form of insurance.


posted by: Abigail Lavallin 11 October 2016