Insurance sector “still in the game” to cover driverless cars

But regulation around autonomous vehicles needs to change, says LMA’s David Powell.

The legal and regulatory framework needs updating to meet the demands of autonomous vehicles, according to David Powell, head of non-marine underwriting at Lloyd’s Market Association.

At a lecture at Lloyd’s of London on 11 January, Powell highlighted that significant changes to the insurance industry are imminent.

“The government is keen to embrace incoming technology and it doesn’t want anything, including insurance issues, to get in the way of this,” Powell stated.

This was made evident when the Chancellor of the Exchequer Philip Hammond delivered his Budget statement in Parliament on 22 November last year.

At the time Hammond said there were “good reasons to pursue this technology” and that the government would step up its support and investment.

According to Powell these reasons include the reduction of accidents and costs, environmental benefits and increased access for people who don’t drive.

He stated that the top ten causes of accidents in the UK involve people, adding that “the scope for improving road safety by taking out the human factor is massive”.

One of the biggest issues for the insurance industry around driverless cars is the question of who is responsible in the event of an accident – the insurer or the car manufacturer.

“In current law there is an issue of what happens to the driver after an accident, because the insurance policy can’t compensate the driver if the vehicle is responsible,” Powell continued.

“It would fall under product liability and be subject to a different law.”

In the game
The Autonomous and Electric Vehicles Bill, which includes the right of recovery for the driver, is currently going through Parliament, and Powell noted it is “likely to be approved”.

“The insurance industry in general agrees with this Bill,” he said.

“It makes the insurer liable, which means the insurer picks up the manufacturer’s product liability claim. This is a good outcome for claims.”

Powell highlighted that an important aspect for the insurance industry would be the ability to access to data to prove who was driving at the time of the accident – the policyholder or the vehicle.

“But the most important bit is that this keeps the insurance industry in the game,” he concluded.

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