There is huge public interest in the issue of driverless cars with Rory Ceglan-Jones reporting from the driving seat of a BMW at the CES Tech Show in Los Angeles on BBC News last week. The huge investment of not only the traditional manufacturers but also the “tech” companies demands a regulatory response at several levels and the UK Government (with DfT leading) has been at the forefront of recognising the need to change, the opportunities of a safer motor environment and the economic opportunities that arise from encouraging the adoption of the technology.
One of the regulatory enablers is motor insurance and on Friday the DfT published its response to a consultation last year which covered compulsory insurance arrangements. DfT accepts the need for changes to the UK’s Road Traffic Act. These will be implemented very shortly using the soon to be published Modern Transport Bill. The detail will need careful consideration once the legislative process commences but the DfT’s overview in Friday’s response is clear and reflects concerns that were raised in submissions to the consultation.
Gaps in product liability cover – the Government acknowledges that conventional product liability law would not have afforded the necessary protection to motor accident victims had it been extended to cover autonomous vehicles. DfT has changed its initial approach and adopts the recommendations put forward by a number of consultees, including the ABI and BLM, of a single insurer model. Normal cover would apply when the vehicle is being driven but when it is in autonomous mode, the motor insurer will be required to compensate the victim(s) – including the “out of the loop” driver – and after so doing may recover, where appropriate, from the person or company (likely to be the vehicle manufacturer) responsible for the defective autonomous operation that caused the accident. The Government recognises that this solution provides the best way to achieve its objective of securing quick compensation to the victims of autonomous vehicles involved in accidents.
Legislation and further consultations – as mentioned the law needs to change and will do so. There will be a need to ensure that the motor insurer properly acquires rights to recover from the manufacturer. Close attention will need to be paid to the clause of the Bill that covers this and to the interaction with the Civil Liability (Contribution) Act 1978. Aside from this detail, the Government recognises that changes to the Highway Code will need to be considered as well as the Construction and Use Regulations. The pace of progress is significant and further work and consultations will need to take place on the nearer term changes that arise from assisted driving technologies such as remote control parking and platooning. Additionally only three short lines in the response deal with the employers’ liability issues associated with autonomous vehicles. Given that there are controlled platooning trials of commercial vehicles planned in the near future one hopes that the DfT’s liaison with DWP, HM Treasury and the insurance sector on this issue takes place quickly.
Cyber risk and autonomous vehicles – an insurer may exclude liability to the injured “out of the loop” driver where the incident has arisen from unauthorised modifications to the vehicle’s operating system that he has made or where he has failed to install required updates. However where the vehicle is “hacked” the insurer bears this risk and cannot exclude liability to the driver. Again the detail is awaited but there are very significant insurer concerns around the risk of systemic cyber-attack on a fleet of vehicles which seems very likely to be beyond the risk appetite of most insurers.
Data sharing – the importance of data sharing is widely recognised by the Government, insurers and motor manufacturers. The response does not propose any solutions but the international nature of the issue is recognised as the Government mentions its participation in EU and UN forums that deal with this issue. An agreed data set that would establish whether the vehicle is in autonomous mode and an indication of liability for an incident would ensure that the policy objective of delivering quick compensation to victims can be established. Although international solutions are needed, it has to be hoped that they can be delivered sooner rather than later if policy objectives are not to be undermined.
The fully autonomous insurer – it is interesting to note that while the Society of Motor Manufacturers and Traders (SMMT) broadly supported the single insurer model that the Government adopted, “several” members felt that existing product liability laws were sufficient for the higher levels of automation of Level 4 or 5 vehicles. Intriguingly, the SMMT also requested that Government should clarify whether vehicle manufacturers would be free to take full liability should an accident occur while a vehicle is in autonomous mode. This probably prompts many more questions than it answers but if for the Level 5 vehicle that is fully autonomous this would in effect mean that the manufacturer would be the insurer. Are manufacturers to become regulated motor insurers?
Next Steps – BLM has been intimately involved in the consultation advising not only insurers but in submitting its own response and is specifically cited. We will continue to respond to the issues both as the Modern Transport Bill proceeds through Parliament and in respect of further Consultations on assisted driving, data, and employers’ liability.
Written by Terry Renouf, consultant