Insurers Active on AVs

Suddenly, there is lots of movement from the insurance industry in relationship to autonomous vehicle (AV) regulation. Many companies and industry representatives have been or are now waking up to smell the coffee that an autonomous transportation system could potentially - though, not definitely - wreak havoc with their stable business model of consumer and commercial vehicle insurance that is regulated at the state level in the United States. They are comfortable, I am guessing, with state legislators and regulators; that's their backyard, as it were, and they know their territory.

It's a valid fear. Look what happened to taxis when Uber and Lyft came along. Taxis were comfortable with city and local regulators and political leaders, only to be blindsided when Uber, in particular, went above their heads to the state level, dumped money in state capitals, and got states to preempt municipalities from regulating or disallowing ridehailing operations.

Background

In two weeks, just in time for the 28th anniversary of the Americans with Disabilities Act (ADA), the Uniform Law Commission (ULC) will consider the draft of the Highly Automated Vehicles Act, which has gone through a few preliminary drafts at the level of the Commission's Highly Automated Vehicles Committee (HAV Committee). My last post discussed the draft, which was released last month.

Foreground

In response to the draft, the National Association of Mutual Insurance Companies (NAMIC) sent a letter to the ULC's HAV committee. I was stunned to see intriguing tidbits that went beyond the usual concerns of generic safety and cybersecurity.

First,  NAMIC wants to see safety repeated over and over throughout whatever model uniform state legislation is adopted by the ULC. The NAMIC literally complained about the decrease in the number of times the word safety was used in the last draft. A decrease of more than 20, by the way.

Second, NAMIC said - well, actually, its general counsel wrote - straight out that because Congress and the federal government are not legislating or regulating, respectively, in effect the states are in charge.

Travelers argues for insurance industry stability and advantages

The Travelers Institute issued a white paper this week that makes a few arguments in favor of retaining the current insurance industry model for the age of AVs. Insuring Autonomy: How auto insurance can adapt to changing risks maintains that whether we own our own cars or whether we all go out and get our rides with shared-use and transit services, we should stick with the current insurance model because - to butcher a cliche - if it ain't broke, why fix it. After all, we all know about and are familiar with auto insurance.

[T]here is a high level of certainty and stability – for consumers, businesses, regulators and legal systems – in the current auto insurance structure. For example, we generally know that all vehicles and drivers are covered with some liability protection whether through insurance (the case with the vast majority of drivers); bonds or cash deposits in place of traditional insurance; or proof of ability to pay for an at-fault accident (e.g., in New Hampshire). And auto insurance has a robust legal and regulatory infrastructure with proper, comprehensive consumer protections in place to govern insurance providers and policyholders. 

Though the white paper makes sensible points in opposition to relying solely on a product liability model of litigation, with its inconsistent results, and years-long delays, the white paper ignores the reality of quick, large settlements by the airlines any time there is a crash - effectively establishing a strict liability system in reality, though not in law.

The paper asks for model state AV insurance legislation, a uniform system of insurance regulation during the long transition to an AV-only vehicular transportation network, and a big dose of education for consumers as they drive partially automated vehicles. Personally, I do not believe any amount of education will eradicate human nature and that partially automated vehicles are an open invitation to dangerous distracted and inattentive human driving.