Fully controls all remaining aspects of driving. ·

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Last updated: June 28, 2019

Fully autonomous vehicles are vehicles, which are capable ofdriving themselves by perceiving the environment and also making decisionsabout safe and desirable routes (Gillian Yeomans, 2014). However, autonomy canbe divided into several levels in the process towards achieving fullyautonomous vehicles.

The said degrees of autonomy according to the Society ofAutomotive Engineers International’s new standard J3016 is shown below:·        Level 0 – No AutomationThe human driver controls all aspects ofdriving. This includes vehicles with warning or intervention systems.·        Level 1 – Driver AssistanceA driver assistance system controls eithersteering or acceleration/deceleration by making use of information about thedriving environment and with the expectation that the human driver controls allremaining aspects of driving.·        Level 2 – Partial AutomationOne or more driver assistance systems controlboth steering and acceleration/deceleration by making use of information aboutthe environment and with the expectation that the human driver controls allremaining aspects of driving.·        Level 3 – Conditional AutomationAn automated driving system controls allaspects of driving with the expectation that the human driver responds to arequest to intervene. ·        Level 4 – High AutomationAn automated driving system controls allaspects of driving even if the human driver does not respond to a request tointervene.·        Level 5 – Full AutomationAn automated driving system controls allaspects of driving under all roadway and environmental conditions.

A humandriver is no longer required.                                                                                                                                                                                         (SAEInternational, 2016)    When looking at the current development ofautonomous vehicles, many automobile companies are taking immense measures tobecome pioneers in the market both independently and in some cases throughpartnerships. Partnerships here include tie-ups with other automobile companiesor even with information technology firms.

Figure 1 compares the execution andstrategy of 18 major companies currently working towards materialising the ideaof autonomous vehicles. Points were given to automobile companies based onspecific criteria. The criteria for execution comprised of sales, marketing anddistribution, product capability, product quality and reliability, productportfolio and staying power whereas vision, go-to-market strategy, partners,production strategy and also technology were taken into account for strategy(Sam Abuelsamid, David Alexander & Lisa Jerram, 2017). Ford clearly looks to be the market leader interms of strategy with plans of bringing level 4 autonomous cars to the road by2021 (Matt Burgess, 2017). With considerably the best execution andsignificantly high points for strategy, General Motors has set a target ofrolling out driverless cars by 2019 in the USA. This large scale deployment hasbeen its goal since the estimated $ 1 billion acquisition of start-up CruiseAutomation in early 2016 (Alexandria Sage & Paul Lienert, 2017). Adding tothat, various other companies are also following suit, probably just fallingshort due to a lack of resource and research.

   Motor InsuranceMotor insurance is basically a policy aimed atprotecting individuals, their vehicles and other motorists against liabilitythrough the payment of financial compensation in the case an accident orcollision occurs. One of the many types of motor insurance cover is the thirdparty only cover. Being a legal prerequisite, when a driver is the cause of acollision, this cover provides compensation to other drivers for injuries and damagesto their vehicle. Also, this cover allows the passengers with the driver atfault to claim an indemnity but does not cover any of the driver’s costs. Thiscover is therefore present and considered compulsory to ensure victims of anaccident on the road are always protected in any given scenario. The thirdparty fire and theft cover is very much similar to the third party only coverbut also insures drivers when their vehicles are stolen or damaged by fire.Lastly, as an extension to the third party fire and theft cover, thecomprehensive cover provides compensation to the driver at fault in case ofvehicle damage in a collision. Different companies also offer differentadditional levels of insurance cover beyond the legal requirement.

In the eventof an accident, the driver has to follow certain procedures to make a claim. Ifthe driver is the cause of a collision that led to damages or injuries to anyother party, the driver must give his own and also the vehicle owner’sinformation to the said party if required. If these details were not given, thedriver at fault should make a report of the accident to the police within 24hours and also his insurer even if there is no intention of making a claim.

Likewise,for accidents involving an uninsured party, the driver should also report theincident to his insurer and the police. Furthermore, innocent victims ofuninsured and untraced motorists in situations of hit and run are ensuredcertain forms of compensation by the Motor Insurers’ Bureau (MIB) (nidirectgovernment services). Having said that, my dissertation aims atstudying the impact of the gradually improving levels of vehicle autonomy onthe motor insurance industry from varying perspectives.         Main Content (Try introduce technical terms, find data or model ifpossible)Chapter 1: UnderwritingCurrently, over 90% of all road accidents are caused by drivererror (AXA, 2017). Hence, it is obvious why the majority of traditionalunderwriting criteria revolves around the driver namely the number and kind ofprevious accidents and also miles driven (Insurance Information Institute,2016).

With autonomous vehicles, many of the said traditional criteria willstill remain, however, greater significance will be placed on model of the vehicleand previous accidents of specific vehicle models, as driver error willeventually be eliminated altogether. Moreover, insurance companies will alsohave to constantly be aware of progressing hardware and software improvements.This is because understanding the level of integration of these improvementswill further aid insurers assess the risks involved. Similarly, the locationwhere the autonomous vehicle is driven majority of the time will also become afar more crucial underwriting criterion.

Initially, this will be to measurerating factors like theft and amount of traffic, which may lead to higherprobability of accidents. Nonetheless, for driverless vehicle underwriting,location needs to be considered because different areas or states placedifferent levels of importance on providing infrastructure suited to thesevehicles. Hence, insufficient facilities and certain natural conditions may actas impediments to automated driving. From a varying perspective, a morecomplicated underwriting criterion would be to recognise the ongoingdevelopment of less than fully autonomous vehicles. The reason is that lack ofunderstanding on partial automation may lead to drivers assuming the presenceof certain functions that the vehicle may not have been designed to do in the firstplace. This false sense of security can in turn result in drivers neglectingcertain driving skills causing an increase in accidents. All in all, measuringand recording the criteria discussed above will not be a problem, as autonomousvehicles will most probably include telematics devices.

This is furthersupported by the fact that The National Association of Insurance Commissionersforecasts the use of telematics to rise up to 20% within the next 5 years inthe US. Nevertheless, privacy will surely be an issue to certain groups as datacollected by insurers may also be exposed to the possibility of hacks.Therefore, insurance companies will need to find alternative methods toidentify, collect and analyse data and adjust policy coverage and premiums inline with the ever changing risks involved (Namic, 2017).    Chapter 2: RegulationThis leads to the all-important question of who will bear theliability of an accident involving autonomous vehicles.

Based on the VehicleTechnology and Aviation Bill in the UK, insurers will be considered defaultliable for death, personal injury or damages from accidents caused byautonomous vehicles in self-driving mode. For this, besides being insured, thevehicle has to be on the government’s list of all automated vehicles in the UK.Insurers would then be able to recover the cost of damages pay outs fromrespective automobile manufacturers. In addition, the bill also states thatinsurers would not be liable for certain cases including accidents or damagescaused by driver negligence, alterations to the vehicle’s operating system andfailure to install software updates (Out-Law.Com, 2017). These provisionscorrespond to the government’s requirement for drivers to take out dualinsurance policies for autonomous vehicles. Under the two-in-one insuranceproduct, drivers will be covered for both when they are in control of thevehicle and also when the vehicle is in the driverless mode.

This way theproblem of confusion of who the not-at-fault party needs to make a claim againstwill be solved allowing drivers to be properly compensated in any event of acollision (Katie Morley, 2017).US Senators also have recently reached a deal on a self-drivingcar legislation, however, under the legislation, states were still able to settheir own rules on liability and insurance (David Shepardson, 2017). Thus, legal scholars propose thatnegligence should still remain as the underlying factor when consideringliability be it driver negligence or the decision making of autonomous vehiclesgiven the presence of a defect in the vehicle. On the other hand, a reportissued by the American Association of Justice (AAJ) suggests that automobilemanufacturers should be fully liable for any collisions involving theirdriverless vehicles (Victor Schwartz, 2017). This is also further supported bythe fact that car manufacturers namely Volvo have also agreed to accept fullliability in the case that one of its cars is in autonomous mode when anaccident occurs (Adrian Flux, 2015)Nevertheless, to strike a balance between providing compensationto drivers in accidents involving driverless vehicles and also not hinderingthe development of autonomous vehicles in the future, legal scholars have comeup with 2 alternative liability theories.

Firstly, they suggested that driverscarry a no-fault liability insurance. In this case, while holding their owninsurance, drivers will be compensated up to a certain level regardless of whowas legally at fault in a collision. This approach was backed by the RAND Corporationwhich saw it as a much more beneficial alternative to drivers as compared tothe direct shift in liability from driver to manufacturer. The next alternativewas to establish a victim compensation fund for drivers who need to make aclaim from accidents involving driverless vehicles. This way victims are ableto cover losses due to injuries and damages while at same time ensuring thedevelopment of autonomous technology which has the potential to significantlyimprove road safety is not impeded (Victor Schwartz, 2017).

Therefore, it can be concluded that liability will gradually shiftfrom individual drivers to manufacturers inclusive of automobile companies,original equipment manufacturers (OEMs) and autonomous software designers(Adrian Flux, 2015). Accidents involving autonomous vehicles but caused bymanually driven vehicles on the other hand should still comply with currentinsurance liability procedures. Chapter 3: Difficulty in determining the cause of accidentsAdding to that, the transition between autonomous and human-drivenvehicles in the short run will also bring about even more complex challenges toinsurers. With current driverless cars having a dual mode, it allows the humanoccupant to take control of the vehicle. Such a situation calls for thecombination of both the driver’s responsibility for damages and criminaloffences and also the manufacturer’s liability for defective productsapproaches (Zsolt Szalay, Tamás Tettamanti, Domokos Esztergár-Kiss, IstvánVarga & Cesare Bartolini, 2017). This will make it difficult to determineif driver negligence or vehicle defect was the actual cause in the case of acollision occurring.

Furthermore, driving also requires complex social interactionswhich autonomous vehicles may not be able to fully adapt to. Autonomousvehicles are currently being developed and tested to ensure that they are ableto react to the behaviours of pedestrians and other drivers on the road. Googlefor instance has improved its cars’ software enabling driverless cars torecognise cyclists and interpreting their hand signals. However, according toEdwin Olson, an Associate Professor of Computer Science and Engineering at theUniversity of Michigan who studies Autonomy, this is just one of the thousandsof risks that may arise when driving. He explains that the presence of subtlechanges like a traffic officer in charge instead of traffic lights or evennavigating four way intersections may confuse driverless vehicles. Also, adriver may be able to predict based on behaviour if a pedestrian using a phoneis going to stand still or abruptly cross without checking traffic but anautonomous vehicle may not. Hence, to be ready to drive in real life scenarios,driverless vehicles must be able to understand the environment and humanbehaviour, besides being able to respond and communicate with other road users,which may take significant effort and time to develop (Brad Plumer, 2016).This again raises the issue for insurers to determine the party atfault in the event of an accident.

Will the vehicles incapability to adapt toreal world situations be considered a defect in the vehicle or a feature thatthe vehicle did not possess in the first place? In May 2016, an accidentinvolving a Tesla Model S crashing into a truck that took the driver’s liferose questions about the car’s crash-avoidance Autopilot system. According toan industry executive, the cause of the collision may in part be the design ofthe crash-avoidance system, which was designed to engage only when radar andcomputer vision systems agreed that an obstacle was present. Federalauto-safety regulators later claimed that Tesla’s Autopilot system that wasused had no defects (Guilbert Gates, Kevin Granville, John Markoff, KarlRussell & Anjali Singhvi, 2016). Hence, in similar cases, detailedinvestigation and analysis will have to be carried out by insurers todefinitively determine the actual cause of the accident. This may incuradditional costs and impact the overall cash flow of insurance companies thatgenerally aim to maximise their profits.

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