Insurers told autonomous vehicles will require rethink to risk approach

Insurers have been told they have a huge role to play in the implementation in the use of autonomous vehicles, which are set to turn global transport systems “upside down”.

Speaking at Lloyd’s Paul Newman, founder and CTO of autonomous vehicle software company, Oxboticia said the future of transport would change and insurance would be a key part of driving that change.

“Autonomy and insurance come together,” he said. “Insurance is everywhere, because of everything, and so is autonomy.”

Newman added that autonomy will “upturn” transportation.

“We view it as the movement of atoms,” he added. “Be it cucumber atoms, via Ocado, or child atoms to school.”

“The process of transportation has not changed since the pony and cart,” Newman continued. “It has major flaws. The first is it requires one operator per vehicle. We have yet to figure out how we remove the operators out of the vehicle.

“In the future the operators will be able to operate N vehicles. It will be down to the insurance industry to decide what number N is.”

Newman added: “IT will all be turned upside down buy autonomy  but it will not be in one go.”

At present the key areas are off road vehicles, in ports, mines, and agriculture. Newman said when the vehicles move on road it will test not only the vehicle systems, designers and manufacturers but also the insurance sector which will need to understand the risks.

He added the most minimal risk profile would simply to have the autonomous vehicle stationary, therefore the market will need to look at how it can create the acceptable trade-off between risk and reward.

However the use of autonomous vehicles will reduce energy, in a range of are such as smoother acceleration and deceleration, to removing the need for lights or instruments in driver’s cabins.

He pointed out that in London in 2022 there were 4 billion bus journeys taken, and the potential for autonomous vehicle transportation ran into trillions of pounds.

It also enables the world to develop a completely new design of vehicle given that there was no need for any space for human operators.

However Newman said there is still more to be done.

“Autonomy needs to have rapid development, assurance, and deployment,” he added. “Assurance and insurance is king.”

Newman said that while the world focuses on the use of autonomous vehicles “there will be fundamental changes we simply don’t expect”.

“If we don’t get insurance in the heart of the process, we will not get the introduction autonomy and with it the potential for wider changes that will come.”

Newman said the insurance industry will have to redefine how it looks at the risks.

“The question for the insurance industry is how will it approach the cover when you have a situation where a human cannot see what is going on and it is down to systems in the vehicle to identify the risks and take action.”

However, he said there were benefits that come with autonomy.

“Currently when a young person passes their driving test, they are allowed in the road with only their limited knowledge of the roads, and the situations they will encounter,” he added. “However with autonomy the vehicles will be able to access the miles driven by every vehicle ever.”