Abstract
The advent of automated vehicles is already taking place and will significantly disrupt the motor insurance industry. The shift from the human driver to the system as the driver cannot be reflected in the current insurance risk assessment. This call for an amendment of the insurance underwriting was discussed with German experts from both the primary insurance and reinsurance sector with their professional background on motor insurance. Based on the findings, we propose an alternative method to underwrite automated vehicles of level 4 & 5 using an enhanced telematics approach which considers new risk categories such as systems used and the transformed role of the driver as the general user of the automated vehicle.
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As a unique indication, the reinsurance focus group discussed a public pool solution based on the model of the nuclear terrorism pool in Germany. A public entity would be set up by the authorities, would handle recourses affecting automated vehicles and would represent a central contact for injured parties, insurers and manufacturers. This approach would—among other things—ensure victim protection and fair allocation of liability costs. However, due to time constraints, the experts did not explore this aspect in depth.
The representatives of the primary insurance market pointed out the concept of a "unitary premium" for highly automated vehicles. According to this approach, "hard" tariff characteristics such as annual mileage are placed in the context of time and place of use. As a result, other tariff features such as no-claims bonus category would be redundant. However, the extent to which this approach would be risk-adequate was not discussed further.
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Funding
This study was funded by European Union’s Horizon 2020 project “VI-DAS” (Grant no: 690772) which addresses the analysis of the effectiveness and efficiency of advanced driving assistance systems (ADAS) and their impact on legal, ethical and social-ecological academic fields.
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The author Florian David-Spickermann reports that he is employed at SCOR Reinsurance Germany, Branch of SCOR SE, which is a reinsurance company that may be affected by the research reported in the enclosed paper. He has disclosed those interests fully to the editors as well as to his employer in order to identify and manage potential conflicts arising from that involvement. Dr Martin Mullins and Dr Finbarr Murphy declare that they have no conflict of interest.
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David-Spickermann, F., Mullins, M. & Murphy, F. Risk-adequate motor underwriting of automated vehicles: a qualitative evaluation using German focus groups. Environ Syst Decis 41, 189–197 (2021). https://doi.org/10.1007/s10669-020-09771-2
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DOI: https://doi.org/10.1007/s10669-020-09771-2