Uber Accident Won't Stop Insurers from Racing to Develop Coverage for Driverless Cars
March 21 2018 - 05:59AM
Dow Jones News
By Leslie Scism
As federal investigators begin to examine a pedestrian fatality
involving a self-driving Uber Technologies Inc. car this week,
America's car insurers are watching closely.
Car insurers haul in roughly $230 billion of premiums a year,
but much of that intake could evaporate in coming decades, say some
consultants, assuming crucial breakthroughs in driverless
technology that would eliminate the many wrecks caused by human
error.
The potential hit to their bottom lines has property-casualty
insurers in an arms race to figure out how they can design policies
and price the risk of the vehicles that technology firms, such as
Uber and Alphabet Inc., are seeking to deploy in huge numbers,
according to industry brokers, executives and trade groups.
It isn't clear that the death this week in Arizona would be an
example of how liability would shake out for the industry. A person
familiar with Uber said the firm's test vehicles are insured
through a commercial-insurance policy for a maximum of $5 million
per accident. The insurer or insurers couldn't immediately be
learned.
The Uber accident highlights a likely broader trend to come in
driverless cars. Under the current arrangement, individual car
owners must buy liability policies to help cover damage in wrecks
they cause. But in a possible metamorphosis, individuals would bear
less financial responsibility.
Instead, the makers of the vehicles and their many complex parts
will instead assume a bigger share -- via product-liability
coverage, consultants say.
"They are competitors, so understandably they often don't talk
publicly about this, but we do know insurance companies are engaged
with developers, trying to help them reduce their liability
exposure," said Jim Whittle, associate general counsel for the
American Insurance Association, a lobbying group representing some
of the nation's biggest property-casualty insurers.
Those possibly at fault for accidents: vehicle owners,
manufacturers, suppliers, service providers and even data
providers.
The shift from personal liability is also an opportunity for
many of the nation's biggest insurers eager to get in on the action
of insuring autonomous vehicles.
"While insurance coverage for (autonomous vehicles) is not
mainstream, there are companies that will provide policies," said
Maureen Brown, a vice president with Munich Reinsurance America
Inc.
Munich Re does insure some "entities that are researching,
testing, or developing hardware or software designed to move
autonomous vehicle technology forward," according to the firm.
As control of vehicles gradually moves from people to computers,
exactly how the liability will shift remains to be determined,
insurance brokers say. Uncertainties abound as to how autonomous
vehicles will perform on roads with manually operated vehicles,
among other things.
To test vehicles in any state, Uber and its rivals must meet
financial-responsibility laws that obligate all car owners to carry
insurance. States require the coverage so that money is available
to pay damage to victims of car accidents.
In Arizona, the minimum is $15,000 per person and $30,000 per
accident.
Those minimums are far below what many people actually carry,
set low partly to help encourage insurance purchases. When it comes
to deep-pocketed corporate owners of vehicles, victims could sue
for greater sums.
Indeed, should autonomous cars proliferate and if their safety
record isn't as great as many technology enthusiasts envision, car
makers and the manufacturers of component parts can "expect to get
to know their way around every courthouse in America," wrote Randy
Maniloff, an insurance lawyer with White and Williams LLP in
Philadelphia, in an insurance-coverage newsletter.
Uber itself has made insurance a high priority in its
driverless-car push.
The manager of its insurance programs, Gus Fuldner, is highly
regarded in the profession of risk management. He won a "Risk
Manager of the Year" award in 2016 from an insurance trade
publication for innovations in managing the company's risks as a
ride-sharing company.
"He was the driving force that brought insurers, regulators and
transportation network companies together in the U.S. to set a
uniform standard for ride-sharing automobile liability insurance, a
shift that has transformed the insurance industry," an executive at
a unit of brokerage and professional-services firm Aon PLC said in
a public comment at the time of the award.
Write to Leslie Scism at leslie.scism@wsj.com
(END) Dow Jones Newswires
March 21, 2018 05:44 ET (09:44 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Alphabet (NASDAQ:GOOGL)
Historical Stock Chart
From Feb 2024 to Mar 2024
Alphabet (NASDAQ:GOOGL)
Historical Stock Chart
From Mar 2023 to Mar 2024