Self-driving cars could mean major changes to auto insurance
Technology could mean the end of car insurance as we know it, David Booth says.
There’s beginning to be an air of immediacy to this whole autonomous driving thing, a rising momentum that makes protestations of civil liberties lost (as in some day we may not be allowed to drive our own cars) and Rise of the Machine doomsdays (i.e., that the artificial intelligence we are building into our, well, machines will eventually come back to haunt us) seem futile.
Indeed, recent announcements suggest there’s a good chance we’ll be sipping champagne in the back of our computercontrolled cars long before Lord Elon manages to rid us all of the internal combustion engine.
First comes the news that Apple will be developing autonomous driving technology, but not actual cars. According to the official pronouncement — chief executive Tim Cook calling it “the mother of all AI projects” — the geniuses behind the iMac and iPhone will stick to what they do know (computer hardware and software) rather than sticking their noses into something they know nothing about (building cars).
Like Waymo — Google’s new name for its division developing little self-driving runabouts — the world’s second-most-valuable company eventually realized there’s little point trading the extremely high profit margins (16.7 per cent in 2016) of the tech industry for the paltry three to six per cent pocket change common to automakers. With Waymo and Apple seemingly out of the car business, there’s a tad less pressure to rush to EVs, but an even larger focus at OEMs to get a giddy-up on their self-driving technology.
And, according to tech news site theinformation.com, it is these Silicon Valley interlopers that are leading the charge to driverless cars, the site’s auto-tech savvy senior writer, Amir Efrati, placing Waymo (no surprise there) at the head of the self-driving pack, thanks to its ability to develop all its own hardware — notably a Light Detection and Ranging (LIDAR) system superior to its competitors’ — and a long-term focus only on self-driving.
It’s also not much of a surprise that Uber is right behind in second spot, the ride-hailing company’s main advantage being not so much technology, but incentive, as any aspirations of future profitability rest on getting rid of all those pesky humans currently driving their definitely-not-taxis.
Quietly assuming the third spot is Daimler, the company’s longtime focus on high-tech electronic safety gadgets auguring well for the transformation to fullfledged autonomy. And because it sells its low-volume products to customers with relatively deep pockets, the traditional sell-onecar-to-one-customer business model is not as threatened as lower-echelon automakers that will have to contend with volume drops as computerized cars promote the sharing of one car among multiple drivers (and even multiple families).
Other contenders include Delphi (General Motors’ parts-producing spinoff ) and Tesla (the most aggressively autonomous of current automakers). nuTonomy (an MIT spinoff dedicated to nothing but self-driving) and Baidu (China’s Google) to offer some interesting technology, and it’s perhaps a bit surprising to some to see GM and its partnership with Cruise ahead of seemingly more audacious competitors.
Indeed, Ford, despite its bold pronouncements of self-driving cars by 2021, is not rated nearly as highly, in large part because its much-ballyhooed hookup with Google/Waymo fell through.
But, that’s just the who. Much more important is the how.
And by “how,” I don’t mean the technological innovations needed for an autonomous-automobiles reality. Other than Tesla’s contention that LIDAR technology is an unnecessary expense, and a question of whether we really need vehicle-to-vehicle and vehicle-to-infrastructure technologies for self-driving success, the basic design of our driverless future has been written. Rather, I’m referring to the steps needed before we’re going to let a robot drive our cars anywhere. And if I am reading the nand/nor gate tea leaves right, a pronouncement by auto-parts giant Valeo last week may be yet another Rubicon, a milestone that once crossed makes self-driving cars not just inevitable but, more importantly, immediate.
Essentially, Valeo chief executive Jacques Aschenbroich told the audience at the Paris Viva Technology event that automakers — and the high-tech firms supplying them driverless technologies — should be liable if a self-driving car has an accident. In fact, he told CNBC that, while “the carmaker will have to be at the centre … afterwards if we are responsible of some failure in our algorithm then it will come back to us.”
This is a huge societal transformation from the current model that places all of the responsibility — that should be read liability — on the driver. But, as Valeo says, “It cannot be the driver anymore because (in an autonomous automobile) you have no driver.”
The impact of this statement cannot be underestimated. Automakers have long sought to reject responsibility for their products’ failures — Ford for its exploding Pintos, General Motors for its rolling Corvairs and, more recently, Audi and Toyota for their “unintended acceleration.”
So, for automakers — Volvo first broached this subject in 2015 when chief executive Hakan Samuelsson said the company “will accept full liability” whenever one of its cars is in autonomous mode — and now part suppliers to accept any and all liability for all the accidents their self-driving cars create is perhaps a bigger paradigm shift than even the electric vehicle revolution we have been promised.
If this new-found responsibility becomes reality, not only will autonomous technology have a devastating effect on industries like trucking (three-million-plus truckers in North America suddenly becoming obsolete), but it also means the complete demise of the current automobile insurance industry, insurers and brokers alike.
Instead of a supply chain — there are about 40,000 insurance brokers in Canada and some quarter-million in the United States — that thrives on the policies of almost 300 million individual automobiles, a few large companies will simply need to insure the automakers and their autonomous technology supply chains with blanket policies. Or, as Paul Kovacs, author of the groundbreaking Automated Vehicles: Implications for the Insurance Industry in Canada study, says, “The very foundations for the personal automobile insurance industry in Canada — that driver errors contribute to most collisions and personal ownership of vehicles is the norm — may disappear.”
In other words, Waymo may be leading the self-driving universe in technology but, inevitably, it will be this question of responsibility that will determine when — perhaps even if — our cars enjoy the complete autonomy we keep being promised.