Ottawa Citizen - - INSURANCE - PETER KENTER Post­media Con­tent Works

We’re fas­ci­nated with the tech­nol­ogy be­hind au­tonomous ve­hi­cles (AVs) and ride-shar­ing ser­vices such as Uber and Lyft. But for ev­ery revo­lu­tion in get­ting Cana­di­ans from Point A to Point B, there’s an in­sur­ance prod­uct meet­ing that tech­nol­ogy half­way.

AVs have made news re­cently, mostly be­cause they’ve been in­volved in some high­pro­file col­li­sions. For many in­dus­try ob­servers, those in­ci­dents un­der­score the need to de­velop a har­mo­nized na­tional frame­work for safe test­ing and de­ploy­ment of highly au­tonomous ve­hi­cles.

Mark Fran­cis, FCIP, is do­ing ex­actly that.

Fran­cis is the man­ager, driver & ve­hi­cle li­cens­ing, with the In­sur­ance Cor­po­ra­tion of B.C. (ICBC), and he is serv­ing as co-chair of the Cana­dian Coun­cil of Mo­tor Trans­port Ad­min­is­tra­tors Au­tonomous Ve­hi­cles Work­ing Group — which, among other things, has iden­ti­fied im­por­tant is­sues that in­sur­ance com­pa­nies will need to ad­dress as AVs be­come more com­mon on Canada’s roads.

“Some man­u­fac­tur­ers have said they’ll ac­cept li­a­bil­ity when the ve­hi­cle is op­er­at­ing in au­tonomous mode,” he says. “But not all man­u­fac­tur­ers will of­fer this cov­er­age, so in­sur­ers will have to adopt li­a­bil­ity cov­er­age that en­vi­sions both sce­nar­ios.”

In­di­vid­ual AV own­ers may also find them­selves on the hook for greater re­spon­si­bil­i­ties for the car’s per­for­mance.

“What if the owner doesn’t main­tain and ser­vice the ve­hi­cle prop­erly, down­load the lat­est soft­ware up­dates or re­spond to a ve­hi­cle re­call no­tice?” asks Fran­cis. “A col­li­sion in au­tonomous mode might then have to be cov­ered by the driver’s per­sonal au­to­mo­bile in­sur­ance.”

AVs also have im­pli­ca­tions for cor­po­rate trans­porta­tion. Google’s par­ent com­pany, Al­pha­bet Inc., may soon be launch­ing Waymo, the first com­mer­cial AV ser­vice.

“For such a ser­vice, in­sur­ance will have more to do with in­sur­ing the trip for the rider, as op­posed to ve­hi­cle or crash in­sur­ance,” says Paul Gods­mark, chief tech­nol­ogy of­fi­cer, Cana­dian Au­to­mated Ve­hi­cles Cen­tre of Ex­cel­lence. “There is a strong ar­gu­ment for the ma­jor AV de­vel­op­ers to self-in­sure, par­tic­u­larly since the most profitable busi­ness models are likely to be trans­porta­tion-as-a-ser­vice (TaaS) models with fleets, rather than pri­vate AV sales. Waymo, GM and Ford have all in­di­cated that ini­tial AV of­fer­ings will be via fleets and TaaS. There will be a need for auto in­sur­ance, but from fewer in­sur­ance providers who will pri­mar­ily com­pete to sell to a small num­ber of huge fleets.”

The ad­vent of ride-shar­ing ser­vices has also re­quired the de­vel­op­ment of new in­sur­ance prod­ucts to sat­isfy the needs of a new in­dus­try, its driv­ers and cus­tomers.

In­tact Fi­nan­cial Corp. struck a part­ner­ship in 2015 to de­velop a fleet in­sur­ance prod­uct for Uber. It also de­vel­oped tai­lored in­sur­ance prod­ucts for Turo, a ser­vice that al­lows in­di­vid­ual car own­ers to rent their ve­hi­cles.

“The Cana­dian reg­u­la­tory frame­work rec­og­nizes ve­hi­cle in­sur­ance for per­sonal use and for com­mer­cial use, but the no­tion of a car be­ing used for mul­ti­ple pur­poses in a ride-shar­ing con­text did not pre­vi­ously ex­ist,” says Karim Hirji, CIP, se­nior vi­cepres­i­dent, in­ter­na­tional & ven­tures, at In­tact, who led the de­vel­op­ment of both prod­ucts. “We needed to work closely with reg­u­la­tors and with Uber to de­vise a prod­uct that rec­og­nized the dif­fer­ence be­tween the driver us­ing a ve­hi­cle for per­sonal use and for pick­ing up ride-share pas­sen­gers.”

Ryan Stein, CIP, di­rec­tor of pol­icy at the In­sur­ance Bureau of Canada, says he’s en­cour­aged by reg­u­la­tory de­vel­op­ments in prov­inces in­clud­ing Al­berta and On­tario that have al­lowed the cre­ation of new in­sur­ance prod­ucts. He notes, how­ever, that there’s more work to be done with reg­u­la­tors to mod­ern­ize in­sur­ance reg­u­la­tions and re­duce claims com­pli­ca­tions.

“For ex­am­ple, in On­tario, there are ex­ist­ing rules that say that if a per­son is us­ing their car for ride-shar­ing but claims from their per­sonal pol­icy, their per­sonal in­sur­ance still must pay out part of the claim,” he says. “Mod­ern­iz­ing the rules will lead to more in­no­va­tive and com­ple­men­tary in­sur­ance prod­ucts that will in­crease com­pe­ti­tion be­tween in­sur­ance prod­ucts and help the ride-shar­ing in­dus­try to op­er­ate more ef­fec­tively.”

Hirji notes that reg­u­la­tors found it eas­ier to in­te­grate In­tact’s Turo in­sur­ance prod­uct into reg­u­la­tions, be­cause they’d al­ready de­vel­oped a fa­mil­iar­ity with ride-shar­ing.

“When we in­tro­duced an in­sur­ance project for RVezy, a ser­vice that al­lows own­ers to rent their recre­ational ve­hi­cles, reg­u­la­tors ap­proved the prod­uct quite quickly,” he says. “We’re all be­com­ing more at­tuned to the shar­ing econ­omy.”


Mod­ern­iz­ing the rules will lead to more in­no­va­tive and com­ple­men­tary in­sur­ance prod­ucts that will in­crease com­pe­ti­tion.


In­sur­ers will need to ad­dress im­por­tant is­sues as au­tonomous ve­hi­cles be­come more com­mon on Canada’s roads.


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