How will CTP work for self-driving cars?

Self-driving (automated) vehicles are exciting but this new technology cannot work with current CTP schemes.

All owners must have CTP insurance to register their vehicles to drive on Australian roads. Each state or territory has its own CTP scheme but differ in the coverage provided, nature of fault and amount of premium paid. Schemes also vary as to whether they are publicly or privately managed.

It will become increasingly complex to have traditional and automated vehicles on the roads together. The era of self-driving vehicles will probably demand a new Australia-wide approach to CTP insurance.

This article is based on Austroads Research Report, Registration, Licensing and Insurance Issues Associated with Automated Vehicles, March 2017.

Levels of automation

We currently refer loosely to self-driving vehicles, automated vehicles or AVs. But there are officially six levels of automation. Level 2 – driver assistance – is already quite common.

Levels 3 to 5 demand a new approach to CTP insurance. This is because the vehicle, not the driver, is almost completely responsible for the driving task.

Proper control

Road laws are based on the principle a human is in control of a vehicle. Generally, drivers must have at least one hand on the steering wheel for effective control.

If there is no human at the wheel during an accident, who has proper control? The CTP insurer needs to know if the vehicle or the driver had full or partial control at the time and how much. At Levels 3-5, the vehicle is the driver.

Liability

Where a human is usually liable for an accident (unless it is blameless), who will be liable for an AV? This potentially puts responsibility on the manufacturer of the vehicle to create 100% safe products. Some manufacturers may welcome the opportunity to be more innovative and safety conscious. Others may be less willing to face the risk or expense in creating such a vehicle.

In the case of Level 3 AVs (conditional automation), insurers must know who was in control of the vehicle during an incident. This puts a higher burden of proof on all CTP schemes. In fact, government and industry might need to decide when someone is or is not required to be engaged in driving.

Getting the data

How will insurers get the information they need? One way is using event data recorders (EDRs). These can continuously collect data about who and what is driving the vehicle in real time.

EDRs come with their own challenges. For example, privacy, where data are stored and how data are shared and with whom. Manufacturers must disclose in a manual how their EDRs will be used, for example:

• to help determine fault in the case of malfunction, accident or incident
• whether and when an automated mode was functioning and what occurred in a crash, near miss, or traffic violation
• the need to preserve data for later access
• privacy matters to establish liability
• in a form courts can use.

Finding fault

While fault is crucial, Australian states and territories treat fault differently. No-fault schemes in Vic, Tas, and NT provide cover regardless of who is responsible, but insurers still recover against the liable person. Fault-based schemes in Qld, NSW, ACT, WA, SA still vary in the level of cover and blameless cover.

Insurers will need a way of sharing data from AVs to determine fault. Possibly, increasing the quality of data available will help reduce CTP fraud, and bring down premiums for motorists who are known to drive safely.

Premiums might fall generally for highly automated vehicles if they are relatively safer than human operated ones. Fewer vehicles may be on the road because of a drop in personal ownership, or more competition among insurers in the new market.

Even so, insurers need solid actuarial evidence before they can consider adjusting risk rating factors.

Will AVs reduce premiums?

It is too early to say whether AVs are safe. Even so, many experts are making extravagant claims about saving lives and reducing injuries.

In fact, there could initially be more serious injuries because of catastrophic failures of AV systems. Insurers could see more claims for serious and minor injuries from people who would otherwise have died. Meanwhile, the long-term trend in psychological injuries could continue with AVs because of system failure or cyber-risk.

CTP insurance is not likely to become cheaper until there is proof that self-driving cars save lives and reduce all types of injuries on the road.

New CTP ideas for AVs

This is just a selection of ideas from the Austroads report.

First party – Currently, CTP insurance is “third party” insurance. This means your insurer has to claim against a third party in the accident. A first party scheme may work better because you would simply resolve the matter with your own insurer. There would be less inconvenience to other drivers and injured third parties.

Risk assessment – Insurers will need to assess risk differently. The usual driver characteristics used in NSW, such as age, crash history or address, will not apply. Insurers will assess the AV technology to decide on risk and may even introduce new forms of insurance.

For example, the UK plans to extend compulsory insurance requirements to cover product liability for automated cars. Insurers may even introduce software or cyber-attack insurance for vehicle owners.

Registration conditions – Conditions for registration will become more complex for AVs, with different levels of automation and recurring software updates. For example, would AVs be allowed to operate in automatic mode on all roads, or only on certain designated highways?

The shift in vehicle ownership from private to fleet, such as on-demand and rideshare services, could create the need for new vehicle classes.

NIIS – AustRoads suggests the current National Injury Insurance Scheme (NIIS) model could be extended to accidents involving self-driving vehicles. It suggests the creation of national benchmarks for minor and moderate injury levels to work in both private and publicly operated schemes.

Conclusion

The authorities involved in CTP insurance, registration and licensing are still discussing what changes might need to be made for self-driving cars. Finally, crucial CTP considerations for AVs are:

• Fairness of different levels of cover across different jurisdictions for the same crash and injury
• Agreement on who will pay for injury caused on public roads
• Common agreement on who or what is in control of the vehicle at the time.

CTP for self-driving cars is complex and it will not be a clear road ahead.