Stewarts responds to the Government’s proposals to introduce driverless cars to the roads of Britain.

In the race to get a fleet of driverless cars on the road by 2020, in July 2016 the UK Government launched a major consultation into the use of automated vehicle technology and advanced driver assistance systems.

Unveiling its proposals in Pathway to Driverless Cars, the Government invited individuals, insurers and businesses to respond. Its proposals included revising the current regulatory framework for motor transport in order to accommodate the emerging technology of driverless cars. A total of 428 responses were received by the Government, one of which was Stewarts’.

Because the accident claims that Stewarts specialise in all involve life-changing injuries, they usually have a value running into millions. As a result, insurers and manufacturers will exploit any loophole to avoid or reduce their outlay. We are pleased to see that the Government has adopted numerous aspects of our consultation response, notably the proposal to make the insurers strictly liable to pay compensation to innocent victims whose injuries were caused when the vehicle was in an autonomous (driverless) mode.

Potential benefits of driverless vehicle technology

In 2015 the Department for Transport reported 1,732 deaths on the roads of Britain. Over 22,000 were victims of serious injury.

Because human error is the single greatest cause of road traffic accidents in the UK, the incidence of fatal and personal injuries should, if anything, reduce with the introduction of driverless cars.

The technology is designed to eliminate human error by replacing a human’s control of a car with a computerised system that navigates the vehicle to a predetermined destination without any form of intervention required. It therefore has the potential to significantly reduce the number of road traffic accidents.

The shift from human to computer control means that fewer members of the public are likely to own a car in the future. Instead many people will rely on Uber-like services to transport them to their destination, with a range of vehicle options tailored to suit each journey. The burden and cost of the associated maintenance and insurance arrangements will then fall to these service providers.

With less people owning cars, let alone multiple cars per household, parking and relating planning issues will hopefully become less problematic. Driverless cars are also likely to be much more efficient and so a further benefit is a likely reduction in air pollution.

Concerns surrounding driverless vehicle technology

Despite the many benefits that a world of driverless technology could deliver, there is no hiding the public scepticism.

Concerns have been expressed over the effect that driverless cars will have on insurance premiums for conventional vehicles as well as the anticipated costs of insurance products for drivers of autonomous vehicles. Only 31% of drivers currently expect insurance cover for driverless vehicles to become cheaper, according to a survey by Lexis Nexis.

Hopefully those fears will prove unfounded because a key driver behind these technological advances is to reduce the likelihood of accidents on the road. It would therefore be counter-intuitive if the costs of insurance were to increase.

The risk of hacking is, however, a serious concern for the public, manufacturers and insurers. The potential for hackers to take control of driverless vehicles and cause them to crash means that computer hacking is arguably one of the biggest threats facing driverless vehicle technology. One question we pose is whether the Motor Insurers’ Bureau (MIB) would act as a fund of last resort if a mass hacking scenario were to arise? This is something that is yet to be addressed.

Insurance and liability issues

The Government’s consultation paper sought to make a number of lasting reforms to three main areas of the current framework: insurance, regulation and the Highway Code. Given that driverless vehicle technology will shift the control of cars from humans to computers, it is crucial for legislation in these areas to be amended to reflect this seismic change.

One of the Government’s original proposals was to extend compulsory motor insurance to include product liability for automated vehicles. This overlooked that fact that the EU Motor Directives require such cover already. Following a review of consultation responses, the Government has, sensibly, decided to revise its insurance proposals.

The Government now plans to extend compulsory motor insurance to create a single insurer model that covers both the motorist’s use of the vehicle and the automated vehicle technology. The insurer will be liable to pay compensation to innocent third party victims and the motorist if the accident was caused by a car when the advanced driver function was active. This mitigates a problem we currently see when drivers who sustain serious injuries in accidents cannot claim compensation if they caused the accident. The only times when an insurer will be able to exclude liability is (a) if the motorist made unauthorised modifications to the vehicle’s operating system, and (b) if they failed to install required software updates to the vehicle’s operating system. It will therefore become very important for owners of driverless vehicles to have them regularly serviced. This issue will reduce in scale as more people turn to Uber-like services instead of owning their own vehicle.

Whilst the Government’s revised insurance proposal can be seen as a major breakthrough, it could still go further in one key respect. Strict liability on motor insurers for mechanical and technical defects should be extended to all types of vehicles, not just automated vehicles. This would avoid disputes over whether the vehicle in question was autonomous, or being operated in an autonomous or semi-autonomous way at the time of the accident. This would also save innocent victims from the cost and uncertainty of trying to prove either product defect or negligence in servicing. A common current example is insurers arguing they should not be liable when someone is seriously injured following a tyre blow-out.

In our response to the Government’s consultation, we were concerned by the suggestion that the injured victim’s claim might be defeated by allowing manufacturers to avoid liability by running a ‘state of the art’ defence. Following the revised proposals, this ‘state of the art’ defence only arises in the claim an insurer may make against the manufacturer to recover their outlay. Whilst the Government expects that some cases will go to court on this issue, they are optimistic that over time manufacturers and insurers will work together to develop processes that handle recovery claims effectively. Thankfully, the victim’s claim against the motor insurer is simpler, with strict liability applying, and so is not subject to the evidential challenge of this type of highly technical and expensive defence.

Volvo has already vowed to take responsibility for any accidents caused by technical failures in its driverless cars. It remains to be seen whether other motor manufacturers will follow suit. Tesla has declared that it will not, refusing to cover any losses that arise from failures in its driverless car systems.

The Government has made it clear that it does not plan on introducing restrictions on manufacturers’ ability to provide insurance/product liability cover. The only requirement is that any coverage they do offer fits within the framework of single insurance cover. Over time we may well see many of the major motor manufacturers offering insurance as part and parcel of the costs of the vehicle.

The entry of technology companies like Google and Uber into the car industry means that motor manufacturers are already having to think very differently about how they market themselves and their products. New technology-based entrants like Google, Tesla and Uber have brought innovative thinking to the motor sector that is unconstrained by how things were previously done. This will be a serious challenge to the longer standing motor manufacturers, but we are already seeing a number of them rise to the challenge, often in collaboration with companies from the technology sector.

No-fault state compensation schemes

The consultation had considered the alternative of a no-fault state compensation scheme, as in New Zealand. Such schemes, including the CICA scheme for victims of criminally inflicted injuries here in the UK, tend to significantly under-compensate those with serious and life changing injuries. In our view, there should be no erosion of the right of innocent accident victims to recover full restitutionary compensation. It is a welcome relief that the Government’s response suggests that this inadequate option has been shelved.

Pitfalls in the Government’s proposals

Whilst the thrust of the Government’s proposals is welcome, it is clear that its scope could be wider.

Delays in the current compensation of innocent road traffic accident victims and the increased costs of the legal process highlight the current inconsistencies of UK motor transport law with EU legislation. Large numbers of vehicles regularly travel to and from England and the continent and the numbers may well increase with the ease afforded by autonomous and semi-autonomous vehicles. It is therefore essential that adequate cover is provided for English citizens who may be injured by European motorists and vehicles on our roads, or when travelling in Europe.

It is not, however, just a matter of complying with EU law but, more significantly, about ensuring that innocent victims of motor accidents are compensated. Without this, a large part of the financial impact of their injuries will fall to the State. Rather than taking the opportunity to conduct a full review of the Road Traffic Act, as Professor Robert Merkin QC and Nicholas Bevan forcefully advocated in their response, the Government has instead decided to adopt a minimalistic approach when making changes to the current framework. The possibility of addressing motor insurance at a later date has not, however, been ruled out.

A new Modern Transport Act

The current inconsistencies between UK and EU legislation for motor transport suggest that the time is ripe for a new Modern Transport Act. Rather than trying to bolt on new clauses to an already defective Road Traffic Act, a new comprehensive Act should be introduced to govern this area of the law.

The half-hearted implementation of the Motor Insurance Directives into UK legislation has only served to further highlight the deficiencies in the current regulatory framework for motor transport. The EU is in any event likely to insist on the UK’s full implementation of the Motor Insurance Directives if UK citizens are to continue enjoying the benefits of cross border remedies post-Brexit.

A Modern Transport Act will need to be capable of simplifying, correcting and clarifying existing law as well as sweeping away the inconsistencies that exist between the Road Traffic Act and the Motor Insurance Directives. The current right of English resident victims of road traffic accidents to bring their compensation claims through the English Courts should be retained. This right emanates from the European Motor Insurance Directives, but has only been partially implemented nationally by The European Communities (Rights against Insurers) Regulations 2002.

Concluding thoughts

With 250 million driverless cars set to be on the road by 2020, it is no wonder that the Government has already started planning reforms to UK motor transport law. If driverless vehicle technology is to become a reality, UK law needs to be revolutionised. Any new law must be capable of anticipating the known forthcoming advances. To delay doing so would put a very heavy onus on the Government to react quickly to this rapidly developing technology.

The spotlight has so far been on insurance and manufacturing companies, and the challenges that they are set to face when driverless vehicle technology is introduced. By way of example, the Government in its consultation paper sought estimates as to the likely costs of insurance companies and others providing liability cover for automated vehicle technology. Given the persistently high annual number of road traffic accidents, this ought not to be a primary concern of the Government. The public’s safety should come first, the right to compensation of victims of such technology an important secondary concern, and the cost to insurers and others in providing liability cover a distant third.

The Government’s resistance to undertaking a full review of the UK’s motor transport law means that members of the public who have the misfortune of being injured in road traffic accidents will continue to have to navigate their way through a confusing, inconsistent and at times unfair body of law that really needs to be properly rewritten from scratch.



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