Travelers Examines the Future of Auto Insurance in the Age of Autonomous Vehicles
Travelers Companies, a major player in the insurance industry, has published a white paper addressing the evolving landscape of auto insurance in the era of autonomous vehicles. The paper, titled “Insuring Autonomy: How auto insurance can adapt to changing risks,” was developed by the Travelers Institute, the company’s public policy division. It builds a framework for how the insurance sector can adapt to the unique challenges and opportunities presented by self-driving cars.
Michael Klein, executive vice-president and president of personal insurance at Travelers, highlighted the importance of the insurance industry’s involvement in upcoming policy discussions. He noted, “With the increasing adoption of semi-autonomous vehicles and the potential for fully autonomous vehicles, several policy-related questions and challenges are beginning to emerge. It’s important that the insurance industry play a central role in policymaking discussions to develop a uniform legal and regulatory framework for autonomous vehicles. Ensuring that a clear risk transfer mechanism is in place will help facilitate the development of autonomous vehicles and the improved safety we expect they will bring to our roads.”
While anticipating a decrease in accidents overall due to the implementation of autonomous driving technology, the paper suggests any incidents that do occur could lead to more expensive repairs. It also points out that these incidents will likely raise complex issues regarding liability, victim compensation, and data collection. Travelers further stated that regardless of a vehicle’s level of autonomy, fundamental risks associated with vehicle ownership, such as weather-related incidents and theft, will persist.
According to the report, Travelers believes that the existing auto insurance structure is well-equipped to handle compensation, including areas like bodily injury, property damage, and cyber incidents, that may arise in the autonomous vehicle market. The company believes that the current auto insurance system, due to its familiarity with consumers, allows for greater speed, fairness, and efficiency. The paper also notes that the auto insurance structure is better equipped to adapt through the development and/or improvement of insurance products. The paper contrasts this with alternative risk transfer systems, such as product liability, which are not structured to provide comprehensive solutions.
The white paper offers a series of recommendations:
- Develop a model state law specifically related to autonomous vehicle insurance, building upon current regulatory structures.
- Mandate that vehicle owners, including those of personal, ride-sharing, and company-owned vehicles, maintain adequate insurance coverage.
- Ensure sufficient coverage to account for the increased cost of technology found in autonomous vehicles.
- Establish stringent cybersecurity requirements for autonomous vehicles, including data-sharing protocols.
- Utilize insurers’ communication programs to educate consumers and the public about autonomous vehicle safety.
- Ensure representation of the insurance industry in policymaking forums.
The white paper provides a comprehensive overview of the evolving challenges and opportunities in auto insurance. By highlighting these key areas, Travelers aims to foster a proactive dialogue and help the insurance industry adapt to the changing needs of the autonomous vehicle market.
