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Research Question

  1. What are the challenges and opportunities for the automobile insurance industry as AV technology becomes widely deployed?

The potential benefits of autonomous vehicle (AV) technology are described in media reports almost daily. Many new model vehicles on U.S. roads include aspects of AV technology such as lane-changing alerts, forward collision warning, and blind spot warnings. As fully AV technology begins to be deployed in more vehicles in the United States, we will enter a time of transition for the auto insurance industry. The liability regime that currently underpins auto insurance, which is based on individual driver liability, may soon change to reflect a greater emphasis on the liability of the manufacturer of an AV.

On July 14, 2017, the RAND Institute for Civil Justice held a workshop, "Rethinking Insurance and Liability in the Transformative Age of Autonomous Vehicles" in San Francisco, which brought together stakeholders including insurers, reinsurers, plaintiffs' attorneys, defense attorneys, automotive industry representatives, regulators, and consumer representatives. The discussion focused on the implications of AV technology for insurance and liability regimes as the industry enters a time of transition. The workshop addressed key uncertainties and challenges for the existing liability and insurance landscapes and explored how these systems might address any potential disruptions.

These conference proceedings should be of interest to policymakers and regulators who are grappling with new and emerging technologies, and other stakeholders with an interest in the implications of AV technology for insurance and liability regimes.

Key Findings

  • Insurers and manufacturers need to identify the state of the art of AV technologies going forward.
  • AV manufacturers, developers, and insurers need to fully understand AI and explain to consumers how AI makes decisions.
  • Insurers need AV data to create pricing policies for automobile insurance and to assess underwriting risk.
  • Security of AVs, particularly in terms of hacking by a malicious actor, is a very important issue for the insurance industry.
  • Original equipment manufacturers have powerful brands, and they are going to hesitate to admit fault in the event of an AV crash.
  • The advent of new technologies might allow us to rethink how the status quo does not necessarily make for good policy.
  • Predictions of catastrophic job loss resulting from AVs may be overstated in the short term.
  • It is important to think beyond the car in creating a safe environment for the introduction of AVs.
  • It may be difficult to insure AVs in California under the current regime unless Proposition 103 is changed.

Recommendations

  • Investigate and better understand consumer attitudes about trusting and adopting a new technology.
  • Create a research design to evaluate consumers' use of AV technology as soon as it is available to consumers.
  • Conduct research to explore other industries that have experience with AI (e.g., aviation, nuclear engineering), to identify how the AV industry might learn from them.
  • Evaluate whether driving culture varies by region and geography and whether AV algorithms will need to drive differently in different regions.
  • Investigate the AV data that are needed by consumers, manufacturers, regulators, and insurers.
  • Conduct research to identify and quantify the impact of AVs on insurance coverage.
  • Evaluate cyber safety and privacy issues posed by AVs.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Morning Session: Key Uncertainties That Will Shape Future Liability for Autonomous Vehicles

  • Chapter Three

    Lunch Presentation: The Conundrum of Autonomous Vehicle Safety

  • Chapter Four

    Afternoon Breakout Sessions: Liability and Insurance Rethink

  • Chapter Five

    Key Issues, Research Questions, and Next Steps

  • Appendix A

    July 14, 2017, Workshop Agenda

  • Appendix B

    July 14, 2017, Workshop Attendee List

This project is a RAND Venture. Funding was provided by gifts from RAND supporters and income from operations. The research was conducted within the RAND Institute for Civil Justice within RAND Justice, Infrastructure, and Environment.

This report is part of the RAND Corporation conference proceeding series. RAND conference proceedings present a collection of papers delivered at a conference or a summary of the conference.

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