The impact of autonomous vehicles. The hope is that the frequency and severity of accidents will decrease over time as more self-driving vehicles occupy the nation’s roads. (Photo: Shutterstock)

The number of self-driving vehicles is expected to increase, following the U.S. Department of Transportation’s December 2018 decision to ease federal oversight of autonomous vehicles and Congressional plans to reintroduce legislation that could add as many as 100,000 vehicles with significant autonomous functionality to the road by 2022.

In the meantime, hundreds of self-driving vehicles are already motoring around, unnoticed for the most part. To date, 29 states have enacted legislation related to the use of autonomous vehicles on state roads, with another dozen states lining up to do the same. As the National Highway Traffic Safety Administration (NHTSA) recently predicted, “Fully automated cars and trucks that drive us, instead of us driving them, are a vision that seems on the verge of becoming a reality.”

When exactly this will occur remains uncertain, with projections ranging from ten years to a full generation away. Nevertheless, a future in which cars and trucks rely on Automated Driving Systems (ADS) to do all the driving in all circumstances seems inevitable; promising what appears to be safer roads for all. Several studies indicate that fully autonomous vehicles will greatly reduce crash and related injury statistics. It’s between now and then where increased safety is not an absolute given.

So far, so good

Chubb is one voice in the chorus of organizations studying self-driving vehicles. The company insures developers of the sophisticated technology systems, sensors and software that enable a fully autonomous vehicle to sense the surrounding environment, and direct vehicle movements without the need for human intervention. These companies are developing solutions not just for cars and trucks; they’re also testing them in other motorized forms of conveyance, such as tractors, forklifts and mining equipment.

To be clear, Chubb does not presently have a program to insure self-driving vehicles themselves; rather, the company insures certain software and systems installed within autonomous vehicles for research and development purposes. Chubb has insured software and systems developers for many years, even before autonomous vehicles were imagined. In fact, Chubb underwrote many of these developers during the birth of autonomous vehicle technology, from the time they were tested on tracks through the time they were tested on public roads.

Over this period, Chubb’s accident-related claims data appears to indicate that autonomous vehicles are safer than vehicles driven exclusively by people. Why the italics? The reason is that from an actuarial standpoint, the insurance industry has yet to amass a sufficient volume of data to unequivocally determine the safety of self-driving vehicles. Further hindering the data analysis is that the insureds are testing dozens of different autonomous systems and software solutions.

Putting aside these qualifications for the moment, it is instructive to note that Chubb has yet to receive a claim where a self-driving vehicle was determined to be the at-fault vehicle in an auto accident.

Claims data underscores the safety implications during the transitional period when both fully autonomous vehicles and human-driven vehicles are sharing the road. According to NHTSA, 94% of accidents are due to human error. Unless the human element is completely factored out of the driving equation, accidents will continue to happen.

More data is needed

The hope is that the frequency and severity of accidents will decrease over time as more self-driving cars and trucks occupy the nation’s roads. Since fully autonomous vehicles operate independently without a human driver, fewer people at the wheel should reduce the risk of error. A study by the Brookings Institute affirms this possibility, stating that automation “will dramatically increase safety on the highways by reducing both the number and severity of accidents. To some extent it already has.”

The research group is referring to the many vehicles today with semi-autonomous collision avoidance systems using sensors, software and wireless transmission to automatically steer and brake a car or truck when dangerous conditions are present. A case in point is electronic stability control systems helping drivers maintain control on turns and slippery road surfaces by automatically selecting which wheels to use for braking, which “have saved thousands of lives,” the institution stated.

Unlike people who become distracted, tired or stressed by traffic, the autonomous systems are programmed to do the same things the same way all the time. As NHTSA stated, “Automated vehicles have the potential to remove human error from the crash equation, which will help protect drivers and passengers, as well as bicyclists and pedestrians.”

Liability and insurance

According to the National Safety Council, an estimated 40,100 people died in motor vehicle-related crashes in the U.S. in 2017 (up from 35,092 in 2015, per NHTSA). As fully autonomous vehicles become mainstream, these dire statistics should come down significantly.

Accidents involving both types of vehicles are likely to entail new concepts of liability and thus new insurance treatments. For example, claims may be filed against the companies that design, manufacture and maintain self-driving vehicles, as well as the providers of the software and systems they rely upon — the companies we presently insure.

These various parties may, in fact, be liable based on traditional theories of liability like negligence, strict liability, misrepresentation and breach of warranty, and the parties’ respective contribution to the cause of an accident. State governments regulating insurance also may draft new rules governing safety and accident liability that alter current liability paradigms.

At this juncture, it is too early to predict how traditional passenger and commercial automobile insurance will address these new exposures. Product liability insurance, errors and omissions insurance, cyber risk insurance, and new risk transfer solutions yet to be developed may combine in an automotive context with more traditional insurance products.

Insurers can be expected to insure the risks of this developing mode of conveyance — on roadways, factory floors or in the fields pursuant to their various policies issued. In the transitional period before we migrate to a world of fully autonomous vehicles, Chubb continues to insure the software providers at the leading edges of researching and developing these extraordinary technologies.

Veronica Somarriba ([email protected]) is executive vice president and technology and manufacturing lead at Chubb.