Earlier this month, Håkan Samuelsson, president and chief executive of Volvo Cars, caused a significant stir when he said Volvo “will accept full liability” whenever one of its cars is in autonomous, or so called 'self-driving', mode. Knee-jerk speculation was that car manufacturers would eat some of the insurance industry's lunch, but now the consideration is whether they can digest the depth of responsibility.
It's no wonder the Scandinavian statement got insurers' hackles up. For the average Ontario brokerage, personal lines auto insurance represents 54.6% of income, according to the Insurance Brokers Association of Ontario (
IBAO). And there is no doubt that the emergence of driverless or self-driving cars will prompt disruption within the industry.
Volvo was the first car maker to publicly make such a promise on the question of liability.
Google, not a manufacturer but still a major player in the self-driving car ecosystem, has also been dogged by speculation that it too wants to break into insurance.
Jim Murphy, CEO of IBAO, warns that automotive manufacturers might not be fully aware of what they're getting into. He told
Insurance Business Canada that auto insurance coverage is a complex product. When an injury occurs after a collision, it grows more complex.
“When you layer computers and technology on top of that, the complexity compounds even more. While it is great that some auto manufacturers have announced that they will absorb the liability, they need to understand the depth of responsibility. For example, are they only covering the cost of repairing the vehicle? How will accident benefit coverage, or the human side, be managed?”
While Volvo's Samuelsson has urged regulators to work closely with car makers to solve outstanding issues such as questions over legal liability in the event that a self-driving car is involved in a crash or hacked by a criminal third party, Murphy said drivers should be reminded that the line between insurance starting and car manufacture liability beginning is unclear.
“While automobile technology has advanced, insurance coverage has not,” Murphy said. “Adaptation is needed on the insurer side to match the change in liability tied to the operator [in the case of] driver versus computer.”
As driverless car technology continues to advance and the insurance companies look to adapt their coverage models, there will be a period of transition. Brokers will play a key role in this transition and as an advocate for consumers and the conduit between the insurance company and the policy holder, they will be looked upon to provide advice to their customers at each stage of technology progress. And Murphy maintains this can only be achieved through collaborative efforts between car manufacturers, insurance companies and brokers.
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