Automated Vehicles:
Potential Insurance
Implications
Robert Tremblay
Director, Research
Insurance Bureau of Canada
June 2, 2014
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Introduction
 Automated vehicle technology is on the verge of maturity.
 Technology moves fast; can insurance follow the changing needs?
 What about the regulatory environment? Licensing, mandatory insurance?
 There are potential insurance implications. But before we discuss, we
need to understand a few concepts….
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Types of Insurance


Personal

Automobile

Home/residential
Commercial Insurance (non-standard)

Commercial vehicle fleets

Businesses, buildings, machinery, production interruptions, product liability etc.

Reinsurance

Global risk transfer for personal and commercial lines

Surety bonds

Linked to product liability, performance
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INSURANCE BUREAU OF CANADA / DATE/PRESENTER
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Players
 Self-insurance
 Large businesses/organizations
 Governments
 Primary insurers (private or public)
 National
 Reinsurers
 National
 Global
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30, 2014
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Automobile Insurance
 First party
 Damages to your vehicle
 Own injuries
 Third party (except in no-fault systems)
 Damages to other vehicle(s)
 Bodily injuries to others
 Punitive damages
 No-fault system
 Each party responsible for own damages
 Cannot sue for punitive damages beyond compensation scale
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Business as Usual for Insurers?
 Still speculating, no clear direction yet
 Have to go by insurance principles
 Industry responds to needs
 Impacts potentially will be felt at different stages of
technology implementation
 Development
 Introduction
 Maturity
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2014
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Concept of Liability

A party can be held liable if that party’s conduct or product causes harm to another
party.


Parties in a liability-insurance-covered incident:

the insured (first party)

the insurance company (second party)

the injured or property owner.
Third-party liability insurance is a vehicle insurance that covers an insured whose
vehicle caused harm to someone else or caused damage to property and that insured
is held legally responsible.
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Liability Chain

Who is responsible if something goes wrong?

Currently, the driver of a vehicle is responsible for being in control of the motor vehicle.

But … at level 4 and certainly at level 5 of autonomy, the driver is no longer a driver. He
or she has surrendered this function to the machine.
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2014
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Development Phase

Not just an enhancement of existing technology

Requires extensive testing in a real driving environment.

Insurance is critical for “real life” testing.

Basic insurance coverage is required, but is there a need to go further?

Self-insurance is an option – usually large corporations will seek performance
bonds or excess coverage, beyond the self-insurance limits.

There will be a need for product liability for software developers, sensor suite
manufacturers, and interactions between sensors and vehicle.
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April 30, 2014
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Introduction Phase

Automobile insurance will still be necessary due to coexistence of
driverless and human driven cars

Insurance industry will need to have good data for pricing.

Need to use collision stats during testing/development phase
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Maturity Phase
 With time, the cost structure of automobile insurance will be
affected.
 We can expect physical damages to vehicles: theft, vandalism.
 Bodily injuries, both minor and catastrophic impairment, will be
reduced.
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Business Models
 Individual transportation providers might go beyond
the auto manufacturers.
 Business models will affect insurance requirements.
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http://www.universalfunding.com/blog/wp-content/uploads/2012/08/business-handshake.jpg, April 30, 2014
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Changes in Types of Risks
 Hacking/terrorism
 Data breaches
 Inappropriate response routine by program causing crash
 Technologies coexisting
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30, 2014
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Challenges Ahead

This new technology will bring challenges.

Insurance industry is adaptive.

Cooperation and constant dialogue among all stakeholders will ensure
success.

You can expect insurers to support car or transportation pod owners and
businesses meet their insurance needs of the future.
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http://restoringtheimage.typepad.com/my_weblog/2011/08/rough-road-aheaddrive-on.html, April 30, 2014
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Thank you!
Questions ?
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