IBC: framework for governing autonomous vehicle claims already underway

Published: April 27, 2018

Updated: July 24, 2018

Author: Luke Jones



The path to autonomous vehicles it becoming clearer, with cars now on the road that have driverless technology, albeit in a limited capacity. As we progress further towards full autonomy, an eventuality that is believed to be at least a decade away, insurers need to build up a system around the disruptive tech.

In Canada, insurance companies are already underway in creating an auto insurance framework for driverless vehicles. While carriers are still concerned by how liability will shift to manufacturers and the potential shrinking of the auto insurance market, they are laying foundations for managing auto claims more quickly. This would be a solution that functions regardless of whether liability is with the driver or manufacturer.

“We all know the automated vehicle revolution is coming with major ramifications for auto insurance,” David McGowan, senior vice president of strategic initiatives at Insurance Bureau of Canada (IBC), said during the trade association’s annual general meeting Thursday.

McGowan was speaking on behalf of IBC president and CEO Don Forgeron, who prepared the comments.

“In the new paradigm, product failure rather than human error will become the key factor for liability coverage. And we must prepare for a messy transition during a time when fully automated vehicles will share the road with less automated ones.”

He said the bureau is working with insurers to create an integrated framework, with development underway since 2017. Reflecting on the changing auto insurance climate, McGowan described the industry as entering a “brave new world”.

Companies will use the framework as a starting point for creating the necessary solutions to handle liability from driver error and manufacturer defect. Product liability is a hot topic in the autonomous vehicle debate and IBC says the framework puts a focus on this area. Specifically, a fully autonomous vehicle involved in a collision would place the manufacturer as the liable party.

The framework is intended as a guide to ensure that existing provincially-prescribed auto insurance products and supporting legislation are appropriate for establishing liability and facilitating claims arising out of collisions involving automated cars, Ryan Stein, IBC’s director of policy, told Canadian Underwriter in an interview after the AGM Thursday.

One key area the framework addresses is product liability. If a car is fully automated, for example, a car manufacturer may be at fault for a crash because the car itself was defective in some way. That raises issues in resolving an auto insurance claim, Stein noted.

“Product liability claims are more complex and take longer to settle than typical vehicle collision liability claims,” said Ryan Stein, IBC’s director of policy in an interview with Canadian Underwriter. “Do you want a person who is injured in a collision caused by an automated vehicle to go through a protracted period of uncertainty during the claims process?”