Autonomous cars on their way — but insurers are not ready
Industry moving at glacial pace compared to technology, says Lorraine Sommerfeld.
Our future is automated self-driving cars, we're told. Much of the technology is already used in Advanced Driver Assistance Systems (ADAS) such as lane-departure warning and automatic emergency braking. In Ontario and some U.S. states, automated vehicles can even be driven among us. While front-runners such as Tesla duke it out with the not-far-behind legacy manufacturers, one thing is clear: having the vehicles is only one piece of the puzzle.
Just ask the auto insurance industry.
“Canada is not ready to insure even partially automated vehicles (AVS), but the move towards fully-automated vehicles could be here by as early as 2026,” an article in Canadian Underwriter warns. “Current legislation does not adequately consider accidents involving Level 3 automation, and will likely fail to address considerations around even higher levels of autonomy.”
And Canada's patchwork of provincial insurance legislation promises a tangled path forward.
You're probably familiar by now with the designations of autonomous vehicles: Level 0 has no autonomous features; Level 5 is fully automated and requiring no driver. In practical applications, we are currently mucking about between Levels 2 and 3, both of which still require a driver to be ready and able to take control of the car.
Level 3 vehicles are not yet legal on North American roads, though that hasn't stopped legions of Tesla owners (most notably) from testing the limits of the deceptively-named Autopilot in their cars — with sometimes tragic results. There are ongoing investigations by the U.S. National Highway Traffic Safety Administration into 30 such events.
The problem with technology outstripping the pace of legislation is that drivers know what their cars hypothetically can do, even if it's not yet street legal. And even if their insurance expressly doesn't cover it.
From JD Power: “Level 3 is known as conditional driving automation. It uses various driver-assistance systems and artificial intelligence to make decisions based on changing driving situations around the vehicle. People inside the vehicle do not need to supervise the technology, which means they can engage in other activities. However, a human driver must be present, alert, and able to take control of the vehicle at any time, especially in the case of an emergency due to system failure.”
Most manufacturers are extremely cautious in how they advertise the abilities of driver assistance technologies — and stress “assistance” over “replacement.” Most manufacturers.
The development and deployment of autonomous vehicles is being fostered in tighter applications, small fleets deployed for deliveries working in a geofenced area. Cruise ( getcruise.com) and companies like it explore tangible, real-world ways to make autonomous vehicles good for cities and the environment. This is where we should be looking to learn the necessary steps to full automation.
Ten years ago, readers were asking when they would see savings on their insurance premiums because they'd purchased vehicles which had the latest and greatest in crash-avoidance and occupant-protection technology. It did happen; it costs more to insure an older car than a newer one, all other things being equal. But premiums declined in one area while lurching ahead in another.
“Repairs are far more expensive on the newer vehicles because of all the sensory components,” says Debbie Arnold, a broker with Sound Insurance. “For example, five years ago, a bumper might have cost $750 to replace, whereas now it's $3,000. The vehicle ratings have not caught up to the repair costs.”