Are driverless cars the next broking opportunity?

Driverless technology has the potential to completely transform the way people think about motor and fleet insurance. Companies like Volvo, Holden and Ford are all investing in their driverless offerings and insurers and brokers will need to do the same.

As every broker knows, motor insurance is big business in Australia. It is worth more than $19 billion in annual revenue and it also has huge reach, being one of the most common types of policy held by both individual customers and businesses.

On the role of brokers in an autonomous vehicle world Gallagher Bassett, National Business Development Manager, Peter Diskin says “In 2016 the role of an insurance broker is about so much more than helping a client buy the right insurance products – it is about employing a whole range of strategies to help clients manage and mitigate their risks. Within that context brokers play a vital role in helping clients understand the costs/benefits of driverless technology, and how doing so would affect their risks and liabilities.”

“Brokers advising on motor fleet will need to be at the forefront of understanding this emerging technology. As a third party claims administrator, at Gallagher Bassett we’re very mindful of how this new technology dramatically impacts everything about a motor claim, from the liability through to the availability of data about the claim, and we’re working closely with our broker clients to ensure our offerings continue to meet the evolving needs of the market.”

Forecasts on when driverless technology will be fully realised in Australia vary, from as soon as five years to ten to twenty, but driverless cars are already being tested in South Australia.

Another major opportunity in a driverless world for the insurance industry and brokers will be cyber insurance says Diskin “We’ve already seen the risks that occur when cyber meets motor, with hackers successfully remotely targeting software in Jeeps last year (read more). There are two main areas of cyber risk with it comes to driverless vehicles. The first is the risk of interference, where hackers are able to control or interfere with a vehicle remotely. The second area of risk is to the data – driverless cars collect and transmit a lot of information about their passengers and this may be valuable as a target for hackers.”

“Best practice standards for protecting against these risks will emerge over time, however while this technology is developing the risks are going to be very real, and are likely to increase demand for cyber insurance products that incorporate motor protection.”

The big question when it comes to insurance for driverless cars is– who’s at fault for an accident when no one is driving? Followed by more questions:

  • Who should be held liable for damages – is it the car owner or the manufacturer?
  • If it’s the manufacturer, then is their duty of care to the driver, or surrounding pedestrians?
  • What about third party property? Is this the responsibility of the manufacturer, or should consumers protect themselves through additional policies?

Diskin says “We don’t have all the answers yet, however in terms of liability we’re expecting that for the most part drivers will not be held responsible. Recently Volvo announced that it would accept liability for accidents caused by their self-driven cars, and we’d expect other manufactures will take the same approach. This can be attributed to the fact that it’s most likely to be the programming or sensors that cause an accident.”

The November issue of Insurance Advisor magazine hits the stands soon and has more on this topic.