i3 - January/February 2017 - 32

Some automakers say they
will take full responsibility
for their self-driving cars (at
least while the vehicles are
driving themselves), and all
are expected to do so eventually. The result could be
product liability-like coverage
supplanting personal liability
policies, experts say. But the
burden of this commitment
would be factored into vehicle
purchase prices, which will
rise to well above today's
mass-market levels.
So, experts also predict
self-driving cars will spur
changes in vehicle ownership
patterns, when fleets of selfdriving vehicles belonging to
ridesharing companies like
Uber and Lyft replace private
cars in the decades ahead.

Shifting Mindset,
Shifting Blame
Today, most homeowners
own multiple cars that they
drive themselves. Of the
more than three trillion miles
traversed by autos each year
in the U.S. alone, only about
two percent is accrued by
taxis or car services, including
ridesharing services, says
32

JANUARY/FEBRUARY 2017

John Matley, principal with
Deloitte Consulting's Future
of Mobility Practice. By
2040, the scenario will flip,
with self-driving and ridesharing cars becoming the
primary means of transportation for people, particularly
in urban and suburban areas,
Matley says.
"Autonomous cars that
are owned by individuals are
going to tend to be highly
customized, they're going to
be on average more expensive
than the average car today,"
he says. "Cars are still going
to need insurance," he adds,
because of damage from
falling trees or vandalism.
"But if you're being driven
around, the question is
who is responsible for an
accident? Our point of view
is that insurance will need
to evolve and become much
more product liability-like for
the operating system of these
autonomous vehicles."
Thus, traditional automotive insurers "are going to
have to shift their mindset"
and change their sales focus
from individuals to fleets
and product liability, Matley
says. It will be a challenge for

on the roads, "you'll get a
lot of hybrid approaches" to
auto insurance, says Haden
Kirkpatrick, head of strategy
and innovation at eSurance
Insurance Services Inc., a subsidiary of Allstate Insurance
Co. based in San Francisco,
CA. "And that creates a
lot of unique problems for
insurers, because the liability
ends up being split," he adds,
explaining that such policies
would apply an automaker's
coverage when a vehicle is
in self-driving mode and
the individual owner's
policy when the driver is in
control. In such a scenario,
he envisions, those individual
policies may also be based on
a "pay by use, pay by mile or
pay by hour" model that taps
in to the vehicle's on-board
data stream.

SELF-DRIVING
CARS AT CES 2017
The Self-Driving Tech
Marketplace, presented
by Harman, is set up on the
North Plaza of the Las Vegas
Convention Center (LVCC).
Visitors will learn about
technologies that make
self-driving cars possible.
But the highlight is the
chance to ride in actual
self-driving cars that traverse the surrounding roads,
blending in with the city's
traffic. And the scope of that
adventure will even exceed
the bounds of the vehicle. It
also features the car communicating with a special
V2I (vehicle-to-infrastructure) technology system set
up on the roads around the
LVCC by the Nevada Center
for Advanced Mobility. Driverless car and driver assist
technology makers include
Autoliv, Clarion, Delphi, IAV,
Navya, NVIDIA, NXP and
Valeo. These experiential
exhibits have grown since
the Driverless Car Marketplace at CES 2014 which
occupied just 25 percent of
the space of CES 2017.

I T I S I N N O VAT I O N

ALIJA/ISTOCK

State and federal authorities are working
to keep pace with the technological change
by proposing guidelines or regulations
governing self-driving autos.

insurers akin to underwriting
cyber threats, which are difficult to rate, he adds.
"Over time, the operating
systems, hardware, sensors
and LiDAR ultimately will
become responsible for incidents where they are at fault
and in control of the vehicle."
But until then, the individual
driver will continue to get
blamed, as he would today
even if an advanced driver
assistance systems such as
adaptive cruise control is in
control, Matley contends.
However, "we actually think
that claims become easier with
self-driving cars," Matley says,
thanks to all the sensors and
data they incorporate that can
relate what happened when
an accident occurred.
Deloitte also is projecting
that the frequency of traffic
accidents will decrease as fully
driverless cars multiply during
the next 25 years - from 14
per million miles driven today
(by driver-driven vehicles) to
four or five per million miles
driven by driverless vehicles
starting in 2020.
The consulting firm also
sees the severity of accidents falling as driverless
cars owned by ridesharing
or car service fleets begin to
predominate. It forecasts
those vehicles will be more
mundane and less customized
- like today's taxis - and
will have sticker prices of only
$8,000 to $15,000. (Insurers
calculate accident severity in
terms of the cost to repair or
total a vehicle.)
"Particularly in the
short- to mid-term,"
when driver-driven, semiautonomous and fully
self-driving cars are mixing
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