Liability Issues with Self-Driving Cars
Introduction đź’»
We’ve been seeing rapid increases in the safety of autonomous vehicles over the past few years and their rapid rise in the mainstream along with it, yet an unresolved issue remains the possible legal and financial implications with regard to how the car insurance industry will adapt to these new changes. Liability, too, is an issue that will exist throughout all stages of autonomous vehicle development. Volvo, for example, recently became one of the first companies to acknowledge these issues, and stated that it will hold itself accountable in all cases of malfunctions/accidents involving one of their autonomous mode enabled vehicles.
The Problem
It’s important to realize that the transportational shift to self-driving cars is going to be a long-term process, with the transition expected to take decades. Moreover, in the intermediate or hybrid stages of this shift, when self-driving and manually controlled vehicles are on the road at the same time, the latter will inevitably disproportionately be held accountable for any mishaps. Even in ideal scenarios, the people who programmed the autonomous vehicle, or road maintenance workers - anyone could potentially be held accountable. The passenger of a self-driving car would obviously not be responsible, but in the real-world, one can expect the government to be pressured by insurance lobbyists to shift some accountability.
A seemingly logical solution could be to use “captive insurances”, where companies start their own insurance subcompany. Captives could be more cost-effective in the long run, and offers a solution to the worry insurance companies today may have of becoming redundant due to low profits (this is quite unfounded - although the number of accidents continues to be at an all-time low, the cost per accident has risen rapidly). It’s a reasonable guess that insurance costs will fluctuate only slightly and may decrease, and as accident occurences go down, profits may remain relatively the same.
The Ownership Dilemma
Another variable that affects the financial security of autonomous vehicles is that of car ownership. With services like Uber and Lyft, less people are now choosing to become car owners and I expect this trend to continue. This might lead to a complete shift towards a Cars-as-a-Service based mobility on demand model. Since automakers will be the owners here, insurance companies as they exist today might become defunct as these car companies may grow large enough to not be affected by the relatively minor and rare losses they incur due to accidents.
Smaller service provider companies, however, which cannot support the cost of starting their own captive wing, might be insured externally as an entire company. Expanding onto both these models, a third party mediator might also be involve to prevent conflicts of interest and for legal justice, and would primarily be responsible solely for handling claims (with the only difference being that the passenger/user does not have to be an insurnace premium.) There are some highly unlikely possibilities too - if a company goes haywire and accidentally pushes a disastrous bug update, cars may behave in unprecedentedly dangerous ways. As with any technology, Murphy’s law is always applicable, and by attempting to exploit security bugs, individual blackhats or rival companies may try to cause bad PR for their opponents by forcing the latter’s cars to behave erratically. This could start the need for something similar to a cybersecurity insurance too.
The Road Ahead
In the impending future, however, as we move forward towards an increasingly hybrid world of manual and autonomous-enabled vehicles, a major barrier remains car ownership, as if automakers like Volvo accept all risk and responsibility, they may struggle to turn out sustainable profits. However, if the individual vehicle buyer accepts the risk, the sale of self-driving cars itself could take a big hit. It remains to be seen how the industry will move past these roadblocks on its path to make self-driving cars a mainstream reality.