The Big Question: Autonomous vehicles – a challenge or opportunity for the industry?With Rebecca Marsden, VP of Risk and Insurance, Oxa

The growth of artificial intelligence continues to be a subject of intense debate. However, there has been tangible progress in the development of autonomous vehicles (AVs), both in the roads and on the seas.

Undoubtedly, AVs have the potential to revolutionise global transport of the future, and the UK government is keen to see the development of AVs which can use the country’s roads. But the vehicles come with a new range of risks and there is uncertainty as to the effect they will have on the broader risk profiles of individual and commercial clients of all sizes.

AVs are sure to test the market’s ability to innovate, but the upsides are potentially huge. With the ability to enhance enhanced safety, reduce accidents and set clear speed limits on public roads the potential market for autonomous vehicle transportation runs into trillions of pounds. It will come with a completely new design of vehicle, given that there will no need for space for human operators. As such, there are growing numbers of insurers who are looking to understand and access the market and the importance of insurance to the sector’s success is clearly recognised.

Ian Summers, Global Business Leader, AdvantageGo.

Rebecca Marsden, vice president risk & insurance at autonomous vehicle specialist Oxa, agrees that the risks and opportunities that AVs will pose to insurers will go a long way to redefine the future of the industry.

She joined the company earlier this year, having been head of innovation at Apollo’s syndicate 1971, where she specialised in data-driven underwriting. The AV future will see vehicles which will have no driver’s seat or steering wheel and Marsden says the insurance sector has a vital role to play it both its development and future success.

“At present we are looking to build partnerships across the market to inform product innovation,” she explains. “The next steps will involve insurance and a fit for purpose insurance product suite will be key.”

Marsden adds: “We have already seen the first fully autonomous journey on a European road and what we are now looking at is a scaling up of the sector which will require broader market support from insurers.”

Oxa’s software is both vehicle and hardware agnostic, but Marsden says the likelihood is that the first area where scale will be achieved will be off road with AV’s in areas such as agriculture, mining facilities, ports and airports. Not only are these areas where there is not a high level of human vehicle traffic but they are also bring with them a more flexible regulatory environment .

“We are looking at delivering the technology where the world needs it right now,” she explains. “We can grow and scale it as the regulations allow.”

Marsden says there are a panel of insurers already involved in the AV market and actively with Oxa, and those numbers are increasing on a monthly basis.

“The numbers are growing and the AV industry is keen to collaborate with insurers to ensure that we build the right AV ecosystem which includes the approach to risk and insurance. It is a phenomenal opportunity to be a market leader in what will be the next industrial revolution. Insurance is needed and is mission critical as it will be vital to ensure we can build consumer trust.”

Marsden says the AV sector is built on the ability to turn deep data into deep knowledge and the lessons learned can be implemented into the insurance process.

“We are looking at how we can do incredible things with what is a by-product of the AV technology.”

The interest in the use of AVs is rapidly growing. “We see the current economic environment as one where there is a move towards the reduction of costs and with autonomous vehicles there is less of a need for humans to be behind the wheel,” Marsden explains. “Supply chains where there is a lack of available drivers, for example. AVs can deliver real value wherever there is transportation within the value chain.”

She adds that the use of AVs will have significant environmental benefits at a time when companies of all sizes are looking to reduce their carbon footprint:

“We see the future of autonomous vehicles as electric powered. The way humans drive does not promote good CO2 performance. With AVs there is no harsh breaking or rapid acceleration and the vehicles will drive at an even pace. It is a big piece of the puzzle for many businesses.”

Looking to the future, Marsden says the risk and safety implications will take time to evaluate while there is a mixed usage of roads between human and autonomous vehicles.

“We have to face the fact that human driven vehicles have an unacceptable safety record,” she adds. “A move to an autonomous future will result in fewer people killed due to human error. There will come a point where human interaction is minimised with the safety implications that will come with that transition.”

When it comes to insurance, Marsden says the potential is huge as is the wider future impact of technology on insurance and the products they deliver.

“What the industry in partnership with the autonomous vehicle sector will need to do is create new bespoke solutions which will cover all the risks as the development of the AV market continues. It will need to be a new approach which is not tied to the existing scales of risk. Liability is clearly a major issue for the AV sector, and the debate is ongoing around the legal and risk landscape. Insurers have to be part of those discussions. We expect the regulator to opine on liability which should create some clarity.”

Marsden concludes: “In a scenario where there is an incident and the dispute goes to court, it is clear the legal firms will want to establish a precedent, that will be in place as the technology scales up. We need to work together to ensure that we are ready, flexible, and working towards large scale adoption, with all the pieces in place ahead of time.”