When the topic of self-driving cars comes up during a dinner at Bob’s Place or Debb’s on Queen, it’s likely to inspire a variety of hot takes.
- “They’re a dangerous gimmick! I’d never get behind the wheel of one.”
- “They’re our inevitable future. They’ll make roads safer and more efficient.”
- “Huh, like the Jetsons?”
We’ll leave the theorizing and pontificating to others; today, we’re here to discuss how self-driving cars could impact the auto insurance industry here in Canada.
WAIT, ARE SELF-DRIVING CARS EVEN LEGAL IN CANADA?
Sort of.
Thanks to a pilot project here in Ontario (O. Reg. 517/18), since 2016, the province has allowed testing of automated vehicles (AVs). Stricter rules were added in 2019 that enabled driverless AV testing, provided the vehicles prominently display a “self-driving vehicle” sign.
“A person may drive or permit the operation of an automated vehicle on a highway if the owner of the vehicle has been approved under section 9 to test automated vehicles, and the vehicle is being driven only for testing purposes under the pilot project established by this Regulation.” Read more.
So while our streets are not (yet?) filled with self-driving cars owned by normies like you and me, it seems that we’ve begun preparing for the day when they may be.
BlackBerry’s QNX, Magna, Uber and the University of Waterloo are currently testing 10 vehicles. If and when the cars become available, the government of Ontario says they will be allowed on our roads. (1)
Note: So far in Canada, Ontario is the only province to allow driverless vehicles.
SO THEN, HOW WILL SELF-DRIVING CARS BE INSURED?
At the time of writing this article, this is a question that’s yet to have a definitive answer.
However, if the Insurance Bureau of Canada (IBC) had their way, there would be a single policy framework that covers both driver negligence as well as automated system faults. The reason is that it would simplify the claims process by having a single insurer regardless of fault.
To us here at Erie Mutual Insurance, this concept makes sense, and we’ll be following the matter closely in the coming months and years.
DO WE KNOW YET HOW ELSE SELF-DRIVING CARS WILL IMPACT AUTO INSURANCE?
So far, all we have are projections, hypotheses, theories and best guesses, but here is some of what we should probably expect.
1\ Fewer Collisions + Higher Claim Costs
If autonomous technology progresses the way the experts expect, we should expect to see fewer accidents. Perhaps related, the costs per auto insurance claim when accidents DO occur could rise significantly due to the complexity and high value of AV components. (2)
2\ Expanded Liability Risks
New technology = new risks such as software/network failures, cybersecurity threats and negligence related to failing to install updates.
3\ Data Collection Opportunities
Autonomous vehicles generate an abundance of data, which will be valuable for things like:
- risk assessment
- auto insurance pricing
- claims handling
- fraud detection
However, auto insurers may still lack sufficient data to quantify these dynamics fully, at least in the early days of the AV revolution.
WHAT’S NEXT FOR SELF-DRIVING CARS AND AUTO INSURANCE?
This is a rapidly evolving industry that will impact many facets of our lives.
For Early AV Owners: We encourage you to speak with your insurer proactively to ensure any new AV technology is declared and insured under appropriate policies.
For the Insurance Industry: The coming years may bring us emergent frameworks defining liability, combining driver and product liability, and leveraging vehicle data. We’re excited to learn and grow!
For Regulators & Policymakers: Coordinated, updated legislation is critical to ensure fair compensation and to avoid coverage gaps as AV deployment increases.
We all need to be prepared! Drivers, insurers and policy makers alike.
Erie Mutual Insurance proudly serves the commercial insurance, farm insurance, home insurance and auto insurance needs of members throughout Southern Ontario including Haldimand, Niagara and Hamilton.
Please don’t hesitate to contact us with any questions you may have about this or any other topic related to your insurance.
SOURCES:
2. otip.com
3. reuters.com
