Automated and Electric Vehicles Bill

[1] We wish to comment upon the Insurance and Connected and Automated Vehicle (CAV) provisions of this Bill

[2] Our overall opinions of this Bill are that it is well thought through, with adequate consultation and which has clarified several insurance issues in relation to CAV’s. We submit that the key proposal of a ‘single insurance policy’ provides a positive solution to some of the liability and insurance issues that will be faced, by ensuring that victims of road accidents are compensated quickly and will not be subject to disputes between insurers. Insurers should be able to go back to the manufacturer if it is the manufacturer that is at fault.

[3] It further provides an adequate solution with regards to compensation of ‘drivers’ of these vehicles and whether they will be compensated, along with the potential to recoup losses from those that fail to install ‘critical software updates’.

[4] We recognise that this is only the start and that there is significant difficulty, because the vehicles to which the Bill is aimed are not on the market yet. Consequently, this Bill will inevitably be superseded in the future, depending on the technologies’ development. Nevertheless, there are certain clarifications that should be made and issues that should be looked at, as will now be detailed.

Clarification of the Levels of Vehicle

[5] Whilst it would be evident to ‘experts’ that it is only Automation Levels 4 and 5 of CAV’s that would fall within the insurance provisions of these Bills, we submit that this should be made much clearer and that the parameters of this should be well defined within the Bill. Although we are not at the stage of Level 3 or 4 technology yet, it is important to have relatively well-defined parameters as to the extent to which those borderline cases would fall within the insurance requirements of the Bill.

Revision of the List of Automated Vehicles by the Secretary of State

[6] The requirement that the list must be published each time it is revised by the Secretary of State raises the issue of whether a vehicle which was designed to be used in autonomous mode and is enlisted can then be delisted on the ground that it is not safe to be used in autonomous mode under certain conditions such as adverse weather. A relevant question could also pertain to what could happen where an accident is caused by a vehicle which was considered as autonomous at the time of the accident, yet is delisted at the stage where a claim is made against the insurer.

Scope of Cover

[7] There should be greater clarification as to the scope of insurance required within the Bill. For example, the Road Traffic Act 1988 requires that vehicles are covered on a ‘Road (or other public place)’ [5] , however EU law under the Vnuk [6] judgement requires that vehicles are covered on both public and private land. It is understandable that the UK are currently consulting on changes arising from the Vnuk judgement in relation to motor insurance of conventional vehicles, with concern in relation to fraud

[8] However, the case for having compulsory insurance on private land for CAV’s is much stronger, particularly as the vehicles will have cameras to detect potentially fraudulent claims. Consequently we submit that these vehicles should require coverage on both public and private land

[9] Moreover, ‘might be used on roads or in other public places in Great Britain’ (emphasis added) in clause 1(1)(a) should be clarified so as to reflect that the public places referred to do not encompass waters. This would avoid uncertainties as to whether the Act could apply to autonomous amphibious vehicles that operate both on land and on water - in case they are listed by the Secretary of State - whilst they are being used on water.

‘Driving Itself’

[10] Several clauses of the Bill provide the phrases ‘driving itself’ or ‘driving themselves’ ( eg clauses 1(1)(b), 2(1)(a), 2(2)(a), 3(2)) with no particular definition in this regard, the lack of which could create uncertainties. Especially the phrase ‘when driving itself’ can give rise to the query of whether it merely refers to the autonomous vehicle being in motion. However the vehicle may well cause an accident when stationary, where for instance it has decided to park in a place whereby the risk of accident is considerably increased. Accordingly, the words ‘when driving itself’ can be clarified so as to reflect that it encompasses situations where the software programme installed rather than the driver is in control regardless of whether or not the vehicle is in motion.

Mass Risk

[11] A major issue that has not been introduced in the Bill is in relation to mass-risk. Particularly if more than one vehicle is hacked at the same time and damage is caused, there is a real risk of this happening and this is a real target due to the connected nature of these vehicles. There are a number of potential solutions to the mass-risk issues with regards to hacking, involving separate policies or funds which could compensate in these scenarios. The Bill refers to a limit of liability for property damage by reference to "any one accident", but it is not clear whether the damage suffered by each item of property involved is an "accident" or whether the word is intended to have an aggregating function. Such caselaw as there is on the word "accident" suggests the former, which is unlikely to be what was intended.

Cross Border Travel

[12] Cross-border travel within the EU is not referred to in the Bill. Much will depend upon the Brexit settlement, but if it is the case that the principles adopted in the Fourth and Fifth Motor Insurance Directives are retained, it will be necessary to ensure that liability rules are adapted to allow recovery in Great Britain irrespective of the place where the vehicle happens to be at the time of the accident. In the same way, the Green Card Scheme for non-EU travel will have to be revisited.

Liability Chains

[13] Some clarification is needed in terms of the insurers’ recoupment of potential costs from the manufacturer. Particularly whether the insurer can go back to those who write the software for these vehicles and the extent to which these are liable.

Contributory Negligence

[14] Notwithstanding the fact that the vehicles to which the Bill is aimed are not on the market yet and this entails that the Bill will inevitably be superseded in the future, further clarification should be made in relation to contributory negligence. It is important to specifically clarify the degree of liability where an insurer or vehicle owner is liable and the accident was to any extent caused by the injured party.

Accident resulting from unauthorised software alterations or failure to update software

[15] Some clarification is needed in relation to 4(2)(b) whereby an insurance policy may exclude or limit the insurer’s liability under section 2(1) for damage suffered by an insured person arising from an accident occurring as a direct result of a failure to install safety-critical software updates that the insured person knows, or ought reasonably to know, are safety-critical. The law should distinguish between cases where the failure to install safety-critical software updates is owed to conditions outside the control of the insured prohibiting the installation of such software updates (e.g. due to weather conditions providing no internet coverage)

[16] Furthermore, the amendment of the original Vehicle Technology and Aviation Bill to ensure that it is ‘Critical’ software updates which would entail insurer recoupment is undoubtedly positive. However, it would be useful to remove the doubt as to what this actually means . Some clarity is provided in Section 4 (6) (b) providing, "software updates are "safety-critical" if it would be unsafe to use the vehicle in question without the updates being installed". However, this should go further to either give examples of where the vehicle would become ‘unsafe’ or provide a test to meet as this could be open to significant uncertainty.

Exclusions

[17] Under Section 2 (6) liability may not be limited or excluded by any term of an insurance policy except under Section 4. This is clearly different to the validity of exclusions in relation to conventional vehicles, which can be used under UK law [7] , subject to certain prohibited exclusions under Section 148 (2) of the Road Traffic Act 1988. Consequently, victims of conventional vehicle accidents and automated vehicle accidents will be treated differently, with the former seeking compensation under the Motor Insurers’ Bureau Agreements and the later under the insurance policy, differential treatment between accident victims should be limited.

October 2017