Earlier this week, Raphaël wrote about the role for no-fault insurance in an age of automated vehicles. The post raised several important questions about the future of the auto insurance industry as technology advances:
Who do we want to protect? Passengers, for sure. But drivers? There is no driver! Or rather, there are many drivers. To some extent, at least under a layman’s understanding of the term “driver,” all the actors along the supply chain are driving the AV. Or, to be more precise, it is difficult to pinpoint a single driver: the “operator”? The software designer? And that is already assuming that there is a single entity who designed the software or operates what may be a fleet of AVs. And there may be others, as the AV industry continues to evolve
While Raphaël’s questions will be extremely important for the industry going forward, I want to pose a slightly different question here: Should drivers of Level 4 or Level 5 automated vehicles be required to purchase insurance at all?
Today, every US state except New Hampshire and Virginia require vehicle owners to purchase auto insurance. In a world where human drivers are in control of the vehicle, this makes sense. While flawed product designs or other manufacturer errors may contribute to car accidents today, many if not most accidents also involve some element of operator error.
In a world of fully autonomous vehicles however, this will no longer be the case. The human sitting in what is today the driver’s seat will not be in control of the vehicle in any meaningful way. Every movement such a vehicle makes will have been designed and programmed by the manufacturer or some company along its supply chain.
Given the extent of manufacturer control, would it be reasonable to have accident payouts determined by the law of products liability? Or perhaps, as Michigan Law professor Kyle Logue argued in a recent article, liability should be apportioned through a scheme of strict enterprise liability, in which automakers would be “unconditionally responsible for the economic losses resulting from any crashes of their vehicles.”
Even with the heightened manufacturer liability that may accompany highly autonomous vehicles, some room may be left for owner error, and thus for traditional insurance. Owners may be held responsible for routine maintenance of their vehicles, for ensuring software is upgraded in a timely fashion, or for actions taken if the vehicle is ever taken out of autonomous mode. But even if some minimal level of owner responsibility leads lawmakers to reject Professor Logue’s theory of enterprise liability in favor of maintenance of insurance requirements for owner/operators, insurance’s role will surely be different than it is today.
Which brings me back to a version of Raphaël’s questions that I started with. Who is the true operator of an AV, and what are they responsible for? Answering these background questions will go a long way towards determining the future of auto insurance in the era of automated vehicles.