In the Insurance Bureau of Canada’s recent report on auto insurance for automated vehicles, the industry group representing the country’s largest private property and casualty insurers suggested a fresh approach for autonomous vehicles, including policies that cover both driver negligence and any technology at work in the car.
But Robert Love, head of Borden Ladner Gervais LLP’s autonomous vehicle practice group, says the entire legislative regime currently supporting auto insurance policies, including Ontario’s Highway Traffic Act, is premised on human driver error as the main cause of accidents.
“There will have to be amendments to deal with issues that right now are ambiguous,” says Love, who was on the panel of industry experts consulted by the IBC for the preparation of the report. “Some changes will be required, and others would be helpful, in the sense that they could clarify issues, rather than leaving it to courts to figure [out] and having people litigate for years.”
Without changes, Love says, he foresees drawn-out and expensive arguments over liability when a “driver” claims they were not in control of the vehicle at the time of the accident.
“That’s one of the underpinnings of the IBC proposal: They’ve come up with a one-policy approach that tells an insured plaintiff they don’t need to sue all these different people, because the policy responds whether or not the vehicle was being operated by a human or the technology,” Love says. “Whether it’s ultimately the best approach or one that gets traction is not known right now. But I think the good part is that they’ve come out with a position paper that creates a framework around which stakeholders can start a discussion.”
Charles Gluckstein, a partner at Gluckstein Personal Injury Lawyers in Toronto and former president of the Ontario Trial Lawyers Association, says it’s important that any solution includes a way to hold manufacturers to account, in order to incentivize safety and quality in the production process.
But, ultimately, he says, the intricacies of the approach may pale in significance compared with the revolution he expects the auto insurance industry to undergo in the coming years.
“This is more like a transition piece as the technology comes in,” Gluckstein says.
The IBC report refers to a six-category scale developed by the Society of Automotive Engineers to rate the level of automation in a particular vehicle, ranging from level zero: no automation, in which the driver is responsible for all aspects of driving, to level five: full automation, where the car completes all driving tasks.
Its proposals are meant for any vehicles above level two, which is when the crossover occurs between vehicles mostly driven by humans with technological assistance to those driven mostly using technology but with room for driver intervention.
While experts disagree on how long it will take to get there, by the time we hit level five, Gluckstein says, Canadians’ road use will be unrecognizable. So, too, will the insurance and personal injury industries that stem from it, he adds, with accident levels predicted to drop to a fraction of the 40,000 reported annually by Ontario’s Ministry of Transportation.
“As time goes on and we get up toward 100-per-cent uptake on autonomous vehicles, nobody’s going to be paying attention because there won’t be many claims if the roads become as safe as people think they will,” Gluckstein says.
“The impact on the insurance industry is going to be huge,” says Love, whose practice group was formed to help clients in various sectors stay on top of technological developments.
“When you look at the property and casualty business, somewhere around 40 per cent comes from auto insurance,” he adds. “Fewer collisions means you’re dealing with fewer claims for personal injury and defending fewer property damage claims. Logically, that should mean it is cheaper to insure a vehicle, and premiums will have to go down. That is significant in an industry that has to support fairly large overheads.”
At Gowling WLG in Toronto, partner Parna Sabet-Stephenson has been keeping an eye on driverless vehicles as part of her role as co-lead of the firm’s InsurTech practice group.
“One thing I have learned over the years is that because of the role technology is playing in different industries, it’s not helpful to clients to just be [a] general-purpose technology lawyer. Without an understanding of the challenges and opportunities of technology in a specific industry, you can’t really add the value they expect,” she says. “Worlds are colliding, and auto insurance is one of those places where it all comes together.”