Who is at the wheel?

They call it driverless car, self-driving automobile or robotic car. An autonomous vehicle destined to disrupt human mobility. Web giants Google and Apple, mobility providers Uber and Lyft, not to mention the world’s leading car manufacturers are all heavily investing on it: Tesla, BMW, Audi, Volvo, Mercedes, Toyota, General Motors, Nissan, Jaguar, Land Rover, Hyundai, Kia, Fca and Ford.

Cameras, radars, displays, sensors, laser lights and algorithms. Autonomous cars’ cutting-edge technology is fast developing, with improvements made every day. A sophisticated onboard equipment for new generation cars, for example, will enable them to sense their surrounding environment and to react autonomously to the movements of other vehicles, pedestrians, bikers and other unexpected obstacles that could come up on the road.

 

Even if driverless cars’ R&D is generally perceived as underdeveloped, new developments are fast approaching. Indeed, General Motors and Elon Musk’s Tesla claimed to be able to bring an autonomous car on the market by 2019, much earlier than forecasted, hence anticipating all competitors. Still, it will take few more years to see a driverless car getting around.

 

First, a regulatory intervention is needed. In Italy, traffic laws explicitly define as vehicles “every car of whichever sort circulating on the road and driven by humans”. In the US, the first movers, some federal States allowed autonomous cars road tests years ago and first trials on driverless taxi have begun lately. Moreover, the administration has set out guidelines to be applied in the definition of a consistent regulation throughout the country. In Europe, the first comer was Germany, which approved an ad hoc regulation requiring the physical presence of a human on board while running the due technological tests. France, UK and Scandinavia have something similar at study.

However, to revise regulations is not enough. Technology and AI driven autonomous cars will communicate with other vehicles, transmitting traffic data and weather conditions to better adapt to the journey. This means that the road network should also be “smart”: holes, damaged blacktops and unreadable signs can make onboard advanced control systems go haywire.

 

Therefore, even if the direction is set, we still need to wait to see a new generation of cars invading the market. According to IHS Markit’s analysis (a market analysis and research company), circulating autonomous cars will go from more than a million in 2025 to over 33 million in 2040.

It should be a sufficient time slice to overcome drivers’ skepticism. Nowadays, motorists show some reluctance to get in a car without being able to drive it, allowing technological systems to do the entire business.

 

A study led in 11 European countries by Goodyear and the London School of Economics and Political Science found that 44% of European drivers would not feel at ease being on an autonomous vehicle and just 19% would be so confident to take a nap during the journey.

Beyond the accuracy of the forecasted figures and having to win people’s trust, it is key to highlight that these cars will not only revolutionize the concept of mobility, easing the transfer of elderly and disabled people, but will also affect every industry linked to mobility, starting with automotive and spreading to the energy and insurance sectors.

It is estimated that 90% of car crashes occurring on the roads are due to human errors. While we spoke about autonomous cars, namely driverless cars that do not require human inputs, we should also point to the fact that drivers’ support systems are already in place. They partially represent autonomous vehicles and thus favor a reduction of car accidents.

 

It is straightforward that we are living a great transformation and that the insurance industry needs to interpret it in order to adapt to the change. The increased safety of partially or completely autonomous cars will be disruptive for the automotive sector, which has always been one of the pillars of the entire insurance business.

Car insurance has always been based on drivers’ profile and human error, but once cars will be driven by AI and technology, talking about drivers’ personal liability will no longer be possible. The idea of motor third-party liability should be revised and adjusted on car specifics, distributing the responsibility between the different players interacting on innovative technological connected vehicles: car manufacturers, the software house that caused the damage and the car owner in case he did not update the system.

 

For example, if the automatic brake system should jam, would it be a matter of motor or non-motor third-party liability? The truth is that the intertwine of several risk insurance coverage needs to be accounted for, with the reduction of third-party liability and the increasing weight of legal protection and, above all, cyber risk. Because the main theme of an increasing digital environment is highly linked to cyber security, namely protection against unexpected events such as hacker attacks, which could tamper with data and systems, making the vehicle go haywire.

 

 

Find out more about driverless cars watching the interview with Giancarlo Michellone "The future is driverless".