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Jun 2020

Motor - Playing God: What does it mean for motor insurers?

Source: Asia Insurance Review | Mar 2016

Fully autonomous cars will have to choose who lives and who dies in a fatal accident. Still think autonomous cars will mean the end of the road for motor insurers? As a curtain raiser to our 4th Asia Motor Insurance and Claims Management Conference, we explore this question and more. 
By Benjamin Ang
The benefits of autonomous cars are well documented and anticipated, one of which is that it will eventually be possible to eliminate traffic collisions caused by human driver errors and habits. For some, this sounds like a death knell for motor insurers but that would be jumping the gun. 
How much is a life worth?
While fully autonomous cars are still very much in the far future, what has been less discussed but will eventually need to be addressed is the ethical dilemma of deciding who lives and who dies in the event of an unavoidable accident where all options lead to casualties. 
   Should the fully autonomous car be programmed to sacrifice the driver? What about knocking over a child to avoid a group of adults? Would it be programmed to avoid VIPs at all costs? Or should its priority be saving the driver? 
   Other than questions of morality, how much would a life be worth then in terms of compensation if it were programmed by algorithms to take it away?
Navigating the autonomous environment
What this means is that accidents will never be completely eliminated. While the frequency and severity of car accidents will reduce greatly, autonomous cars will bring new risks. This means that motor insurance will continue to have a role to play in the new environment. 
   The form which it takes though, will likely change. Liability will shift to manufacturers as drivers will no longer be responsible for accidents. 
   And the insurer that can make sense of the data will emerge the winner. With detailed records-keeping by the autonomous car, determining who is at fault should be straightforward with little potential for fraud. So success will come to insurers that are able to engage in the data-rich environment and provide products that are congruent to the new environment. 
Not so straightforward
Will the day come when autonomous cars are the only ones allowed on the roads in future? Perhaps. But it is unlikely in the foreseeable future.
   In the US, the National Highway Traffic Safety Administration (NHTSA) categorises the maturity of automated driver assistance according to a formal classification system: 
• Level 0: The driver completely controls the vehicle at all times.
• Level 1: Individual vehicle controls are automated, such as electronic stability control or automatic braking.
• Level 2: At least two controls can be automated in unison, such as adaptive cruise control in combination with lane keeping.
• Level 3: The driver can fully cede control of all safety-critical functions in certain conditions. The car senses when conditions require the driver to re-take control and provides a “sufficiently comfortable transition time” for the driver to do so. The Tesla Model S is an example.
• Level 4: The vehicle performs all safety-critical functions for the entire trip, with the driver not expected to control the vehicle at any time. As this vehicle would control all functions from start to stop, including all parking functions, it could include unoccupied cars.
   Most vehicles are currently at Level 1. A number of manufacturers are introducing Level 2 vehicles with a few experimental Level 3 vehicles. Level 4 vehicles are being operated on test tracks.
   Even at the speed at which technology is advancing, issues such as consumers’ preference to drive, regulatory hurdles and political motivations may mean many more years before we see only autonomous cars on the road. 
The middle path
What is likely to happen in the foreseeable future will be a middle path of a mixture of different levels of automated driver-assistance cars, which means that motor insurers are not going any-where yet. 
   Then, there are old world problems such as cracked windscreens from pebbles on the road, fires from mischief or mechanical faults, cars being submerged in waters due to flooding, and vandalism – all these will probably still require motor insurance coverage. 
   Unless, of course, the cars have the ability to transform into robots. Now, that will really be the future.
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