The development of driverless cars poses insurance industry questions

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Given this development the insurance industry has started the conversation around the introduction of driverless cars on the roads and is questioning the effect that this will have on its industry and clients, particularly around who is responsible if something goes wrong leading to a loss or damage to property.

According to Lizette Erasmus, Head of Insurance Expertise of IntegriSure, in the event of an accident, insurance companies will be faced with the decision of where the liability lies. "Insurance companies will have to relook at policy structures and stipulations regarding who will be liable in such an event with a driverless car. We may see an increase in auto manufacturer's liability while individual liability may decrease resulting in lower premiums. This alone means that insurers will need to take a long and hard look at their models and adjust accordingly. To add to the liability argument, Google recently revealed that while its driverless car may have been involved in 11 accidents in the six years since it was introduced - it has not been the cause of any. This reinstates that while liability may be questioned, the need for insurance will still be relevant.

Fewer accidents

"Research suggests that driverless cars will reduce the frequency of road accidents, which, although positive, has implications for the insurance industry. Fewer accidents may mean that South Africa's multi-billion rand auto insurance industry may suffer, with fewer claims or claims that may become more complicated if an accident with or between driverless cars occur and raising the question of where the liability lies."

With most, if not all, driverless vehicles housing a variety of cameras, sensors as well as quick response times to aid them in achieving their purpose, it is not difficult to believe the predictions by companies like Google, which notes that automated vehicles may reduce accidents by up to 90%.

Further industry predictions also suggest that with a decrease in accident frequency the demand for repairs or parts will decrease. "However, although the frequency of accidents may decrease, it is likely that the advanced technology used in the parts of driverless cars may impact on the average repair cost," said Erasmus. "It is also important to take into consideration that repairers will have to up their employee skill levels, as well as upgrade their on-site equipment, in order to conduct the necessary repairs according to manufacturer standards. While accident rates may decrease, the need for retraining and expertise, in addition to the cost of repair equipment and the parts themselves, will be factored into insurance premiums."

Erasmus further went on to say that legislation, in so far as the Road Accident Fund is concerned may also need to be revisited. "With the possibility of new modes of transport being introduced, related laws to road safety will need to be adapted. Driving under the influence of alcohol and or using a mobile phone while operating a vehicles, as well as seatbelt laws, may come into question as more drivers hand control over to automated vehicles. This will also have implications for the Road Accident Fund in terms of the liability associated with driverless cars," concluded Erasmus.