Law360 spoke to a number of firms in an article on future complexities around the prospect of driverless cars in the UK. BLM’s Alistair Kinley comments on the considerations around data protection when detailing what insurers may need to consider as the UK government begins to pave the way for driverless cars by 2021. Full article below.
Proposed laws for driverless cars will pitch the U.K. car insurance industry into a new claims world of algorithms and black boxes, moving lawyers to warn insurers to begin preparing now for huge and potentially unforeseen legal implications.
Prime Minister Theresa May’s government expects fully driverless cars on the road by 2021, and lawmakers are drafting new laws to ensure everything is ready for a mighty shakeup to the way that transport works.
"Claimant lawyers, particularly those who are acting on behalf of individuals, need to keep an eye on where this legislation is going,” said Shazia Yamin, assistant solicitor at Leigh Day.
“It is a really tricky area and the amount of information and technology out there is overwhelming in many ways."
Insurance lawyers are already predicting complex courtroom struggles to prove that software or car design caused a collision, made harder by the fact that human drivers will still maintain some control behind the wheel.
Car manufacturers, meanwhile, will be racing to ensure that software does not enable cybercriminals to steal personal data, in an effort to stave off regulatory action and class action suits.
The developments will pose fresh challenges to legislators who may need to force road users to train afresh in how to use an automated vehicle, to guarantee that their insurance still provides cover following a crash.
Here, Law360 looks at four things insurers and insurance lawyers need to keep in mind as driverless car technology takes off.
Compulsory Insurance Is Key to Public Acceptance
Lawyers say that for the phasing-in of driverless cars to succeed — and for citizens to have confidence in the new pod-like vehicles — politicians must extend compulsory insurance to cover automated cars. Only then will passengers know they can swiftly seek redress following a crash.
“Public acceptance and trust are top of the agenda,” Chris Jackson, partner at Burges Salmon LLP, told a London conference earlier this month. “Insurance will be a key part of this.”
U.K. lawmakers have responded to the industry’s concerns by drawing up the Automated and Electric Vehicles Bill, which sets the stage for the cars’ arrival. Lawmakers have subjected the bill to detailed technical examination at the House of Commons, and it now awaits a second debate before heading to the House of Lords, the Parliament’s upper chamber, on its way to becoming law.
The bill starts with the simple proposition that if a vehicle is driving itself, then the insurer is liable for any accident it causes. This will essentially impose strict liability for insurers, meaning they have to pay out on a claim even if no fault is established.
The aim is to ensure that victims can win compensation, without mounting byzantine arguments about whether a state-of-the-art piece of software may have crashed their vehicle. Insurers can then pursue their own product liability claims against the manufacturers of software, or of the vehicles themselves.
The car industry will have a major legal tool in their armory to fight back, attorneys say.
Manufacturers can seek to rely on the “state-of-the-art” defense, arguing that they could not have known of the defect at the time they supplied the product in question, according to Yamin.
“The outcome of litigation surrounding such disputes, which are likely to occur behind the scenes, is going to be quite interesting — particularly in the early years,” Yamin said.
While extending compulsory motor insurance to automated cars follows conventional automotive insurance practice, the bill makes a major divergence — critically, it would enable insurers to refuse payouts to a person who had prevented the car from downloading the latest safety critical updates, in a move that Nigel Brook, partner at Clyde & Co. LLP, described as “novel territory.”
Lawyers say this high-tech shifting of liability is out of kilter with traditional consumer protection rules. It may throw up the need for legislative action to ensure customers fully understand their own obligations. If not, car owners may fail to download key patches and updates, and find themselves unable to claim insurance payouts after a collision.
“The government may need to give some thought to how driver education on these new vehicles will be implemented," said Anthony Middleton, a commercial litigation solicitor at Keoghs LLP. “Will we have a new ‘driving’ test? Will training be provided when vehicles are purchased from a dealership? What happens when somebody hires one of these vehicles for a day?”
This could hit legislators with a fresh workload, as they devise a regulatory framework to train drivers in just how the software works.
The Question of Liability Gets a Bit More Tangled
The biggest legal challenge posed by driverless cars will emerge in the difficult middle ground between human and robotic control, lawyers say.
In this uncharted hinterland, drivers will still play a partial role, despite the new software taking much of the control behind the wheel. This could create a complex maze of liability after a crash, where pinning down who is responsible — the driver, the car or the algorithm — becomes next to impossible.
“Attributing responsibility for accidents will become increasingly complex — that’s a big change and will challenge regulators,” said Laurence Kalman, counsel at CMS Cameron McKenna Nabarro Olswang LLP.
“It’s not just binary, from the nondriverless world into the world of driverless,” he added.
For now, fault-based claims following a crash are comparatively straightforward. But confusion during the transitional period may trigger complex litigation, with insurance companies struggling to prove in court that a technical fault, rather than the human driver, was to blame.
“Those questions will certainly be particularly complex during that period,” Kalman said. “There will be a bit of a patchwork of technologies out there and it remains to be seen how readily we’ll be able to attribute responsibility for accidents.”
Already, many cars on the U.K. roads are at the transitional stage between human and robotic control. Some vehicles are partially automated through software that helps drivers with lane control, parking, cruise control and even automated braking.
SAE International, a global standard setter, rates driverless cars at five different levels depending on the the amount of input from a human driver. Level 5 indicates complete automation. Level 1 reflects the most basic setup, where the driver remains in almost total control.
Later this year, German car manufacturer Audi AG is planning to introduce its R8 model in Britain, starting at £112,450 ($154,715). This is expected to become the country’s first level 3 conditional automated vehicle, according to Middleton of Keoghs.
The car comes complete with a “traffic jam pilot” that will take charge in traffic at up to 60 kilometers per hour at the press of a button, according to Audi. As soon as the autopilot reaches its limits, however, the car requires the driver to take back the wheel.
Audi conducts rigorous safety tests on all its vehicles and nobody questions the R8’s safety. But lawyers say that early stage automation could pose risks for some other manufacturers, and could expose them to lawsuits.
"There a big debate about anything below level 5 autonomy," said Brook of Clyde & Co. “Some companies, like Google, want to go straight to level 5 autonomy and aren't interested in the intermediate stages.”
These phasing-in stages could be dangerous, especially if a passenger who is checking emails — or even watching a movie — is forced to suddenly take control of a vehicle traveling at high speeds. These instances are the most likely to trigger complex and expensive legal battles over where fault really lies.
Data Rules Pose Further Complications
A further legal battle ground is likely to emerge over data protection, as insurers seek to investigate the causes of a crash, while manufacturers may attempt to stop them in their tracks.
Technical experts hope that driverless cars will include “black boxes,” similar to the software in a plane that helps reveal the secrets that caused a crash. This could help insurers understand exactly where responsibility lies and seek redress — but don’t expect software designers to hand over the data easily, experts say.
Manufacturers may resist handing over information, citing privacy rules or commercial confidentiality.
"Getting that data in a way that can be interrogated by insurers is critical," said Alistair Kinley, director of policy and government affairs at BLM. "There needs to be some sort of agreement or memorandum of understanding on how that data is to be accessed in case of an incident.”
Carmakers could also face regulatory action for breach of data requirements, if hackers manage to break through their cyber defenses and steal reams of personal data. Companies of all stripes are already bracing for tough new information protection rules from the European Union, which beginning May 25 will expose them to huge fines for a data breach.
The General Data Protection Regulation will enable the Information Commissioner’s Office, the U.K. data regulator, to fine companies up to £17 million ($23.5 million), or 4 percent of global turnover, whichever is higher. But car and software makers will also need to shore up their cyber defenses against costly group action following an online attack.
“If there was a systemic flaw in a product or piece of technology you could envisage a situation where a major class action could ensue,” said Kalman of CMS Cameron McKenna. “You could see quite reputationally damaging litigation arise.”
Insurers Will Feel the Squeeze as Tech Becomes More Sophisticated
Regulatory changes aside, many industry observers fear that driverless cars could pose a grave threat to cost structures in the motor insurance market.
Even low-impact collisions could result in significant quantum claims. A previously straightforward bumper repair might now include replacement of an array of sophisticated electronic equipment as well.
Manufacturers could also begin to fold in insurance and maintenance deals into the sale of automated vehicles, removing external insurers from the equation.
But the biggest threat may come from the increased safety and associated falling premiums that the cars will bring. So insurers may face rising payouts as their revenues retreat.
“It may just kill motor insurance,” said Sarah Stephens, senior partner and head of cyber at JLT Speciality Ltd., an insurance broker.
"You could see a future where the accident rate keeps dropping, there are fewer drivers on road, and it’s just not a viable business model anymore.”