An unintended consequence of driverless car technology may be that it forces motor insurers to improve their moral standards.
As a driver, it’s natural to assume that one’s insurer will act with decency. Unfortunately, the events that take place on your behalf following a collision in which you are at fault take place largely behind the scenes. At present, in the event of a claim, motor insurers do all they can to reduce their liability – even when the driver they represent is clearly at fault. Sharp business practice might protect the bottom line, but it adds significantly to the trauma suffered by the victims of road traffic collisions.
For example, when a speeding driver mounted a grass verge and ran over a child, leaving her permanently brain damaged, his motor insurer Churchill, challenged a judge’s decision to award £5 m for long-term care and succeeded in reducing the payment. On a smaller scale, as a cycle insurer that represents cyclists injured in road traffic collisions, we are faced routinely with motor insurers trying to avoid their ethical responsibilities.
However, all this might be about to change with the advent of vehicles equipped with automated driver function (ADF). Ironically, it may be the computers driving our cars of the future that will revive the moral standards of the motor insurance industry.
First off, autonomous vehicles will be safer than those piloted by humans. By contrast with us, machines do not have egos, get tired, suffer road rage or drink alcohol. Secondly, machines can process and act upon information far quicker, which makes them safer. Most importantly, the government is to reform the vehicle insurance legislation to make it better suited to autonomous vehicles – In the process, the victims of road traffic collisions may find themselves better protected.
The friendly face of driverless car technology
Change is needed because motor insurance in Britain is based on the driver rather than the vehicle – a model that does not translate to the use of driverless cars. Ministers want the victims of crashes involving autonomous vehicles to be compensated quickly. As a result, it seems likely that Part IV of the Road Traffic Act 1988 will be modified to include the use of autonomous vehicles.
A new model will be established that covers both the driver’s use of the car and the technology itself – other roads users injured by an autonomous vehicle in ‘driverless’ mode will be automatically compensated by the insurer. Another benefit is that as the use of such technology becomes the norm, the number of road traffic collisions will be reduced dramatically. Furthermore, the sea of data collected by autonomous vehicles should ensure fewer claims for compensation can be contested.
Moral standards and the motor insurance industry
Meanwhile, the insurance industry has this week reacted with fury to a government plan to safeguard payouts made to victims of road traffic collisions. The Association of British Insurers (ABI) described as ‘crazy’ the decision to remove the financial penalty currently applied to the lump sum payments made to victims of crashes.
Following an injury, some claimants choose to receive compensation in a series of payments over time, but others opt for a lump sum. The current discount rate is applied to reduce the lump sum by the amount it might be expected to earn in interest over time.
In the face of the almost non-existent interest rates of recent times, the government has decided to reduce the compensation penalty from 2.5 per cent to -0.75 per cent.
Opposition to the removal of the penalty from the insurance industry centres around the possibility of increased premiums. Surely it is mistaken to assume individual drivers are short on moral standards and will be unwilling to pay more so that victims of road crashes can be properly compensated.
**Update 1/3/2017** Since the date of writing, representatives of the insurance industry have secured a meeting chancellor, Phillip Hammond, with a view to stopping, or at the very least, watering down, the proposed changes. The planned changes continue to be framed as a financial burden on drivers rather than a better deal for those who suffer life-changing injuries following a road traffic collision.
Britain’s most ethical insurance company
The ETA has been voted the most ethical insurance company in Britain for the second year running by the Good Shopping Guide.
Beating household-name insurance companies such as John Lewis and the Co-op, the ETA earned an ethical company index score of 89.
The ETA was established in 1990 as an ethical provider of green, reliable travel services. Twenty seven years on, we continue to offer cycle insurance, travel insurance and breakdown cover while putting concern for the environment at the heart of all we do.
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Jim Clark
Do I not recall a case when a young person riding a horse on the grass verge in a 30MPH zone, was struck by a car being driven over the limit. The young person was permanently disabled. The insurance company appealed against the award given to the horse rider on the grounds that the rider was not wearing hi-vis clothing and the award was reduced.
An insurance company with morals!
Brandon Sims
Driver Less Cars, Seems like a thing from the future, But it is very real. The only problem is that the technology isn’t at its verge yet. It has been discovered but the problem is that it has not reached a state of perfection yet.