Driverless Cars On The Road To Fender Benders

Editor’s note: Iliya Rybchin leads the media and entertainment business for Highnote Foundry.

This year, California will allow the testing of autonomous vehicles on public roads. Driverless cars will log thousands of miles this year – an Audi A7 already made a safe 550-mile trip from Silicon Valley to the 2015 Consumer Electronics Show in Las Vegas. However, it’s only a matter of time before a driverless car gets into a fender bender.

A driverless car probably won’t cause the accident. It could easily be an inattentive driver rear ending the driverless car at an intersection. But as soon as that first incident occurs, the ensuing insurance claim and potential lawsuit will create ripples across multiple industries.

When a human is not making driving decisions, who is really at fault? The manufacturer of the car? The manufacturer of the components in the car that process the data? The programmers who wrote the code? The driver who put their faith in the car and did not intervene in time? Should auto insurance policies become product liability policies?

This event will have broad implications, as drones, robots, sensor networks and other “human-less” technologies open up new areas of risk (and insurance) that today’s companies are not equipped to handle.

Someone Has to Take the Blame and Pay for It

The most obvious implication will be on auto-insurance policies. Individual policies will be modified to include riders and other waivers to avoid potential product liability claims. But the companies involved in developing the technology required for driverless cars will also be required to dramatically change their insurance policies.

For decades, automobile manufacturers have incorporated the costs and requirements associated with high levels of product liability into their operating procedures. But until now, this has not been something that chip manufacturers and technology developers have had – or been required to have – as a core competency.

You Can’t Call a Driverless Car to the Witness Stand

Could we be facing the emergence of an Orwellian world? Already, dashboard cameras are standard in Russia, where fears of violence, corruption and misrepresentation combined with the high number of accidents have resulted in proactive consumer protections to obviate ambiguity as much as possible. And more and more frequently in cities like New York, taxis are outfitted with passenger cameras to protect both the driver and the passenger from untrue allegations.

When lawsuits evolve around driverless cars, it will be difficult for courts to process and account for the class of data evidence that will evolve – reams of statistics about algorithms, traffic patterns, precipitation rates and traffic light patterns. It may well be easier, more practical and less open to interpretation to have a video record of every incident.

How will car and device manufacturers respond to demand as insurance companies give deep discounts for cars installed with automated cameras? What new markets will emerge to provide solutions, including not just the cameras themselves but also storage and parsing of the video, interpretation, and certification of authenticity?

Beware of Unintended Consequences

I hope that any incident involving driverless cars won’t squash the rapid evolution of this industry. While it’s impossible to forecast all of the widespread implications of emerging technologies, it will certainly be fascinating to see them evolve. For example:

• Humans are generally rational drivers and have route preferences. Driverless cars are always logical and have no preferences. Automated GPS systems choose (and constantly update) the quickest path from point A to point B given based on thousands of variables. When machines are in charge, it’s easy to imagine that quiet, upscale residential neighborhoods in congestion-laden cities like L.A. could become thoroughfares for driverless cars. Imagine the potential impact on congestion patterns and real estate values. Will depressed areas gentrify when thousands of Google-powered cars start driving through? Will strip malls, fast food restaurants, and gas stations that rely on congestion and drive-by traffic start to go out of business?
• What does the “driver” actually do when he/she is not actually driving? When these cars go mainstream, new entertainment forms are sure to emerge to fill the time previously spent paying attention to the road. New forms of entertainment will need to be engaging but not too distracting. Is this a shot in the arm for a media industry desperate for new revenue streams? Undoubtedly our legislators and insurance providers will have some opinions about what constitutes as “safe in-car entertainment.”

Nobody can know all of the downstream implications of driverless cars. However, a simple fender bender will put the entire industry under a microscope. Clearly insurance companies – not generally known for their ability to innovate and pivot quickly – have both an opportunity and a risk. So, what should insurance companies be doing? As Alan Kay said, “the best way to predict the future is to invent it.”

In order to ensure a positive outcome from whatever changes are on the horizon, companies must take an active, participatory role in the conversation. Insurance companies can’t afford to be passive or to wait until driverless cars come to market. Rather, they must create their own future. This could mean being an investor in related technologies or entering into strategic partnerships.

So far, the discussions around driverless cars have involved Google, Audi, Mercedes, Toyota, and even Intel, Qualcomm, Navstar and Boeing. If driverless cars are to really become a mass-market reality, companies like Progressive, Aetna, Allstate and Geico better get into the conversation quickly.