With driverless cars on horizon, insurers seek changes to laws
Canada needs to modernize its auto insurance rules to accommodate driverless vehicles and should adopt a single insurance policy model similar to one that became law in the U.K. last summer, the Insurance Bureau of Canada said in a position paper Thursday.
“Automated vehicles are coming to Canada’s roads, and the laws that govern insurance and vehicle safety need to be updated to reflect this reality,” IBC chief executive Don Forgeron said in a statement.“We need changes to the provincial insurance laws across the country to ensure that collision victims continue to be compensated in a timely manner.”
The national industry association, whose member companies make up 90 per cent of the property and casualty insurance market in Canada, says a single policy would cover both driver negligence and automated technology malfunctions to expedite the collision and injury claims process.
It also calls for a mandatory data-sharing arrangement that would help determine the cause of a collision, whether the vehicle was in manual or automated mode at the time and the vehicle operator’s interaction with the automated technology. Finally, the IBC recommends an update to federal vehicle safety standards to address new technology and cybersecurity threats.
The IBC paper called Auto Insurance for Automated Vehicles: Preparing for the Future of Mobility, says under a single policy system a party injured in a collision caused by an automated vehicle would pursue a claim directly against the automated vehicle's insurer.
If the automated technology caused the collision, the insurer would compensate anyone injured, including the person in the driver’s seat of the automated vehicle. After compensating the injured people, the insurer would have a right to recover liability payments from the party responsible for the collision, such as the vehicle manufacturer or the technology provider. The single insurance policy would also compensate people injured in a collision caused by a cyber breach of the vehicle’s automated technology.
The insurer could then attempt to recover any liability payments from the party responsible. While covering automated technology malfunctions and cyber breaches, the single insurance policy would pay only up to the minimum legislated amount for a collision that was caused by the vehicle owner and/or operator circumventing, modifying or failing to maintain safety-critical software.
Currently, auto insurance policies prescribed in provincial laws are built on the notion that human error is the primary cause of motor vehicle collisions, the paper says.
“But, as humans cede control of driving to automated technology, collisions will be caused increasingly by product malfunction. This shift in responsibility for collisions from humans to automated technology means many injured people will have to proceed through lengthy and complex product liability litigation to get compensated,” the IBC says. It says a single policy system would help ensure that people injured in collisions involving automated vehicles get compensated fairly and quickly.
In a U.S. study, KPMG predicts that over the next 10 years automated technologies will reduce the frequency of collisions by up to 40 per cent but repair cost will also increase because of the expense of technology for automated vehicles.