Travelers calls for “clear risk transfer mechanism” for autonomous vehicle insurance

Published: July 23, 2018

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Autonomous vehicles are an eventuality that is now widely accepted will happen within the next 15 years. Vehicles are currently equipped with some self-driving technology and full autonomy will one day be widely used. One key questions for insurers has been where liability will lay, with the vehicle occupant or with the vehicle manufacturer.

The public policy division of Travelers proposes a “clear risk transfer mechanism” to be adopted across the industry for insuring autonomous vehicles.

While in the current climate drivers could assume liability, once full autonomy is introduced, the person in the car will not be a driver but merely an occupant. It has been predicted in this circumstance the vehicle manufacturer would assume the liability. This eventuality is still some years away, but it has led to debate about the role of insurers and whether carmakers will simply create their own insurance products.

“While there has not been widespread attention paid to how liability and compensation will be addressed as AVs [automated vehicles] multiply, product liability has been raised as the inevitable default option,” says a recent Travelers white paper Insuring autonomy: How auto insurance can adapt to changing risks, published by the Travelers Institute earlier this month. “That presumption should be challenged. Unlike auto insurance, alternative risk transfer mechanisms like product liability are not structured to be primary, comprehensive solutions.”

Speaking to Canadian Underwriter, Elaine Baisden, chief underwriting officer of personal insurance for Travelers said that the white paper also works if applied to the Canadian auto insurance market.

“Ensuring that a clear risk transfer mechanism is in place and which addresses timely and appropriate compensation will help facilitate the development of autonomous vehicles and the improved safety we expect they will bring to our roads.”

“There would need to be licensing and safety regulations first and foremost,” Baisden added. “Again, we’d want to ensure that a clear risk transfer mechanism is in place [that] will help facilitate the development of autonomous vehicles and the improved safety we expect they will bring to our roads.”