Will electric car need insurance? “Yes,” of course say experts like Niall Edwards, partner at international law firm Kennedys. Fully autonomous vehicles are likely to be considered a different class of vehicle that requires addition al compulsory insurance cover, he says.
“The most likely product will be a package underwritten by a motor insurer that the manufacturer offers at the point of purchase, use or hire.” One possibility is that new vehicles fitted with advanced-driver technology will automatically come with a form of product liability and extended cover provided by the manufacturer.
The good news is that because semi- and fully autonomous cars are expected to lead to a fall in accidents, we are likely to see a drop in premiums. “The price you pay will be much more influenced by the technical capabilities of the car as opposed to estimations of the riskiness of the driver.”
Regulations on vehicle use will therefore need to be revised to allow the use of automotive technology without a driver and – crucially – to ensure that the technology is maintained correctly.
To start with, laws governing motor vehicles need to be amended to include product liability for automated vehicles. But it's certain that AVs will reduce the risks for pedestrians and cyclists? We’re only at the start of understanding how pedestrians and cyclists will interact with a vehicle that doesn’t have a human driver at the controls, says an expert. “Whether a pedestrian will be able to detect whether a car is automated or not, and adapt their behaviour accordingly, we still don’t know.”
Another expert argues that there’s a risk, initially at least, that pedestrians and cyclists may try to “test” AVs to see how they react. “In Singapore, they are currently testing autonomous vehicles in public parks and they tell us that the large majority of incidents [near misses] are not due to the vehicles malfunctioning, but to people jumping in front of the cars to test whether they stop in time," he added.
Mixed traffic carries risk just as there may be risks associated with behavioural patterns we cannot foresee. As with any new technology, there will be failures and even fatalities, but the overall benefits – in terms of [estimated] 90% fewer accidents, 40% less congestion, up to 80% less emissions, and 50% of parking space saved – are so substantial that the technological development will prevail.”
Today’s AV sector is a crowded space. It’s estimated that at least 33 tech and auto corporations, ranging from Apple to Chinese bus manufacturer Yutong – via the likes of Audi, BMW, Google, Honda, Intel, Tesla, Uber and Volkswagen – are currently developing AV technology.
With the $2tn global car industry in the throes of transformation due to a perfect storm of digitisation, AI/automation and changes in consumer behaviour – such as the rise of on-demand taxi services in urban centres – it’s not difficult to see why car manufacturers, tech companies and investors are scrambling for territory, fearful of being left out. “All this change creates both risk and opportunity for incumbents,” say experts.
Some of them claim that since the car industry has historically only focused on the internal combustion engine and shell design, it has no chance against the tsunami of software moving towards their shores. Across the board, major players – Renault-Nissan, Ford, BMW, Daimler and GM, to name a few - are investing in and developing their own technologies, hiring talent or acquiring startups. From GM investing $500m in Lyft to the creation of Ford Smart Mobility, every single big manufacturer is looking to innovate and adapt.
Besides, any notion of a race between tech firms and traditional car makers is a false perception, argues Accenture’s Luca Mentuccia. He predicts a surge of strategic cooperation instead. “We will see even more cross-industry partnerships for autonomous driving in the future in which car makers and a large range of tech firms from chipmakers to big data specialists, telcos and mobility platforms will work together.
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